Fefo 08 19.pdf

Returns to farmland can be thought of in a similar manner as returns to stock, with a cash return and potential appreciation in value. The cash return to landowners in Illinois comes from leasing land, while appreciation comes from increases in land value. However, land values can also decline.

Data from the Illinois Farm Business Farm Management Association was used to estimate landlord net returns for three soil productivity levels: high-quality soils in northern and central Illinois, lower-quality soils in northern and central Illinois, and southern Illinois soils.

Landlord net returns per acre from 1998 to 2007 were highest for the most productive land, with the highest return of $226 per acre in 2007. Net returns varied by year, with significant increases in 2006 and 2007. A four-year moving average showed that net returns reached their low point in 2001 and 2002 and have been increasing since then.

Future returns to landowners will depend on corn and soybean prices and input costs. The highest landlord net return per acre for the most productive soil occurred in 2007, while the lowest was in 1998. Net returns for all three groups in 2006 and 2007 were significantly above previous years' returns.