Articles

    Ray Brownfield shares his views on Illinois land values

    More than 70 people attended The Chicago Farmers’ April 9th meeting to hear Ray Brownfield discuss 2017 land values in Illinois. Brownfield, a 40-year member of TCF, is the managing broker/owner of Land Pro, a company composed of professional land real estate specialists that is based in Oswego, Illinois. An accredited land consultant and accredited farm manager, Brownfield recently received the Realtors Land Institute APEX 2017 Top Twenty Producer award. He noted that he and Jason Lestina, also a member of TCF and an Illinois real estate broker and an accredited farm manager with Land Pro, sold $27 million worth of real estate in 2017.

    Thanks to the melting of glaciers during the Ice Age, portions of Illinois boast some very fertile soil. As the glaciers receded, they left behind silt and minerals that give the state its Class A soil. “The area that I refer to as the Golden Triangle, in the center of the state, has the largest concentration of Class A soil,” said Brownfield. “This soil, of course, commands the best prices.”

    Brownfield noted that buyers usually refer to a farm’s productivity index (PI) to determine the price they are willing to pay for parcels. All farms have a PI, he noted. The PIs are used to quantify yield potential of Illinois soils. The highest PIs are located in east-central, west-central, and northern Illinois. The counties with the lowest PIs are found in the southern part of the state.

    “The prices for excellent soil are down about two percent, but there are still some pockets of strength” said Brownfield. “B quality soil prices are down about one percent, while C quality soil prices are down about five percent, which is due to drainage issues and less productivity.”

    Brownfield said that the regions of the state that have excellent quality soil are experiencing median prices per acre that range from $9,755 to $10,800. Regarding B quality soil, Brownfield said it is a buyers’ market; people are looking for the best possible soil at a discounted rate. “If buyers can purchase land with lesser quality soil at a discounted price, they are willing to invest another $200 to $300 in improvements, such as drainage tiles,” said Brownfield.

    He went on to say that farms with C soils and lower PIs are difficult to sell because they have high clay content, do not drain well and usually are irregular in shape; however, some farmers will purchase these farms if they believe they will fit their needs. Brownfield said that the average quality of soil diminishes as you travel farther south in Illinois.

    Regarding properties with less productive soil, Brownfield said that the demand for recreational land has decreased. The larger the parcel of recreational land on the market, the less attractive it is for buyers because they cannot produce enough income from it and still cover costs.

    How does farmland rate as an investment? Brownfield noted that the annual growth rate in farmland investments from 2001 to 2017 ranged from 6.19 percent to 10.3 percent, depending on the region. The farms have to be held for at least 10 years to experience these rates, he said.

    Regarding 2018, falling commodity prices will affect land prices, said Brownfield. He said that real estate professionals and appraisers don’t expect to see much increase. A December 2017 survey of the group shows that 54 percent believe there could be a one to four percent decrease in land values.

    “A lot has happened since December, too,” said Brownfield. “Tariffs, decreasing commodity prices, increases in interest rates, and the possible elimination of the Renewable Fuel Standard are among the factors leading to price declines. On the other hand, higher yields and good economic growth in the United States will lead to price increases.”

    Outstanding In Their Field

    By John Kiefner, Chicago Farmers member

    I recently took a day off from work. I hope it will be one of many in the next 10 years as I try to slide gracefully into retirement. The USDA states that the average farmer is 58.3 years old. That means if I want be an above average farmer I have 4.1 years to go. Can I make it that long? Following is some background.

    A few years ago the price of scrap steel was insanely high. It was a good time to haul many old pieces of machinery to the scrap yard to be melted and reused. First I called my son to see if there was any chance he would be the fourth generation in the family to farm. I was fairly certain what the answer would be, but I wanted to verify it. His answer was honest and quite frank.

    My son was several years out of college at the time and climbing the corporate ladder. His reply to the query about whether he considered becoming a farmer was, “Not a chance, and remember, when you and mom die, we are getting dumpsters.” Perhaps I should have called my daughter and asked her instead.

    My son’s honesty has helped me to decide how to finish out my life as the last farmer in the family. There is no legacy of passing it on to the next generation. No need to build the business or desire to buy the newest technology.

    For my day off I traveled to Chicago to tour the office of The Climate Corp. This company is on the cutting edge of data collection for weather, yields, fertility, plant health, and equipment functions and, well, about anything you can imagine. The information that is gathered will be analyzed, sometimes instantly, and used by farmers to increase yields while reducing inputs, protect the environment and reduce waste. One would also expect that those who adopt and succeed with these technologies would also be more profitable, while lowering the cost of food even more.

    This technology is above my intellect. It was mentioned that the farmer of the future might very well be a computer scientist or agronomist. We were asked to sign a confidentiality agreement to be allowed to tour the offices and labs. That is remarkable, because I could barely comprehend the concepts displayed, let alone appropriate any of the cutting edge technology.

    Am I a dinosaur about to become extinct? Am I a relic, a holdout of farmers long gone? Retirement is going to come very soon for my equipment and me if these technologies evolve swiftly. That may please the realtors and developers that cannot wait to bulldoze the black dirt I have tried to save from erosion for most of my lifetime and build warehouses or subdivisions on my farm. Can I last long enough to become above average?

    The Climate Corp tour was in the West Loop, about two miles from where I met my wife for the train ride home. Ironically, in the middle of Chicago, there was a wheat mill right behind The Climate Corp office. I walked to the train and admired dozens of buildings under construction on Fulton, Lake, Randolph, Washington, and Madison Streets. Is it possible that any of my recycled steel was in the beams being erected?

    Upon my retirement or death, my remaining equipment will be reused somehow. The farm’s fate is uncertain. When I die, I hope they bury me and do not put me in the dumpster.

    Editor’s note: John Kiefner is a member of The Chicago Farmers. He farms 525 acres of corn, soy, wheat, oats, hay, and straw.  His farm, which also has a smattering of animals, including bees and laying hens, is 45 miles southwest of downtown Chicago and on the fringe of urban development.  The southernmost Metra rail station is only one mile from John’s farm.  

    John noted, “I wouldn't say that I am sad or depressed about urban encroachment, but I hope to make people think of what is the best way to grow cities and preserve quality farmland.  I originally lived and grew up right next to the Joliet Junior College Houbolt Road campus.  I remember when they built it next door to the farm my dad grew up on.  We have always had bulldozers working close to the farm.”