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Operating Loans?  Term Loans?  Farm Mortgages?  Which Loan do I Need?

When starting a farming operation and seeking capital to get you in motion, there are a handful of farm loans a new farmer has to get familiar with to be successful.  Let’s discuss these loans and what makes them each a tool in your farm finance tool chest.

Operating Loans

Operating loans are short term loans that help pay for your daily farm expenses.  These expenses are your annual expected costs to run your farm business throughout a growing season.  Below are some bullet points about what you can use your operating loan for, length (timeframe) of the operating loan, what collateral the loans require, and what type of interest rates to expect:

  • Most operating loans are a one-year term.  The loan balance is repaid on the loan maturity date, or the expiration date of the loan.
  • Operating loans are commonly revolving credit instruments:  this means as you use the loan throughout the growing season and make repayments, you can access that capital again if you need to. Here’s an example below:
    • Farmer has a $100,000 operating loan.
    • Farmer uses $25,000 to pay for seed in February, leaving Farmer with a loan balance of $25,000 and available capital of $75,000.
    • Farmer pays back $10,000 of the loan in March and now has a balance of $15,000 on the loan and $85,000 in available capital to use for farm expenses. 
  • Operating expenses usually include seed, fertilizer, labor, cash rent for land, and fuel.  
  • They can have fixed or variable rates of interest.  Interest is paid when the loan matures and final payment is due.  
  • Operating loans require collateral, as do most loans.  Collateral usually includes liens on crops, livestock, and farm equipment if necessary.

Intermediate or Term Loans

Intermediate or term loans are short term loans that help pay for farm equipment or livestock. You can find information below about the characteristics of term farm loans:

  • Term loans typically vary in length of time from one to seven years.  The loan balance is repaid with a structured repayment plan.
  • Term loans are commonly used to buy tractors, combines, implements, livestock, or farm buildings/structures.
  • They can have both fixed and variable rates of interest.
  • Collateral for a term loan is commonly the asset that the loan is used to buy.
  • Term loans generally have a Loan-to-Value (LTV) ratio, meaning a lender will only lend up to a certain amount of the purchase price. 

Farm Mortgage and Refinance Loans

Farm mortgages are loans used to purchase farmland.  Farm refinance loans are used to restructure a current farm mortgage to achieve access to equity to improve the land itself or to acquire a lower interest rate.

  • Farm land loans can be as short as one year long and up to 30 years.  The farm loan balance is repaid with a structured amortized repayment plan.
  • They can have fixed or variable rates of interest.  Usually, variable rate loans have a period of time the rate can be floating (3 or 5 years out of a 30 year loan).
  • Collateral for farm land loans is the land that the loan is used to buy, and any other land that is pledged as collateral to lower the amount due at signing or to help with the down payment requirements.
  • Land loans have a Loan-to-Value (LTV) ratio.  This means that a lender will only lend up to a certain amount of the purchase price of the land.  Below is an example of a common farm loan scenario:
    • Farmer wants to buy 50 acres of tillable land for $500,000.
    • A farm mortgage at this amount typically has a LTV of 75%, meaning that the bank will only lend up to 75% of the land’s appraised value.
    • Farmer secures a loan for $375,000 to purchase the land for $500,000, and either pays in cash the $125,000 down payment; or, uses some of their land that is owned free and clear as collateral to cover the down payment required.

Farm Lenders

An Overview of Farm Lenders

Farm expansion requires capital.  If a farmer or investor doesn’t have the capital on hand in the form of cash or equity in other assets (i.e. land), they will likely go to a bank to acquire the necessary funds to grow their business.  The question is, what lender is the best to grow your farm?

Hometown Farm Banks

For most farm towns, there is a local bank where farmers can head into town during business hours to set up an appointment with the loan officer to apply for a loan.  

Once the farmer has an appointment with the loan officer, they go through the traditional experience of getting a loan:  filling out standard paperwork, providing information about their personal and business life, and talking to the loan officer about the intended use of proceeds.  Some folks might not feel very comfortable sharing so much information with the banker that they will see at the Friday night football game or at church on Sunday.  Others may appreciate the personal relationship with a local banker that comes along with a hometown farm bank.

Commercial Banks

Other lenders that can provide funds for farmers are larger, corporate, commercial banks.  They can offer competitive rates for loans, but not all of them provide lending for agriculture related borrowing needs.  There are a few commercial banks that specialize in ag lending.  They will have remote offices or branches to provide a local presence to farmers.  Like a farm bank, larger institutions will have written applications and approval processes to give farmers funds for their growing operations.

Farm Credit Banks

Farm Credit was created in 1916 with the purpose of providing lending for rural communities throughout the U.S.  Farm Credit Banks, and their credit associations are cooperatives that lend to customer-owners (borrowers become part owners when they get a loan from a Farm Credit association bank). Farm Credit banks pay patronage dividends back to customer-owners when the banks have had a successful year.  Farm Credit banks are regulated by the Farm Credit Administration.

Government Agencies

If working with the local bank or a larger private commercial bank isn’t the right fit for you, another lender for farm needs is Uncle Sam.  The U.S. Department of Agriculture and Farm Service Agency (FSA) provide a variety of loan programs for buying land, operating loans, microloans, and down payment assistance.

The government lenders are known for having special assistance programs for first time farmers, minority, women, and Native American farmers.  

The FSA offers exceptionally low rates and sometimes lower down payment requirements compared to private lenders, but the application and approval process can be longer to complete.  There are very strict criteria to qualify for government loans and the approval and closing process for these loans are known to be longer than a private bank loan.  For some, the lower rates and special programs are worth it to work through the loan application and approval process.

Digital Intermediaries

The last of the common types of farm lenders are digital intermediaries.  American Farm Financing is a digital intermediary. AFF is not a farm bank or lender and doesn’t actually provide funds to borrowers.  Digital intermediaries provide a quick, easy, digital application and approval process that can set borrowers up with multiple lenders that may best suit their needs.  Instead of driving into town, a digital intermediary takes the most basic information necessary to get a loan and packages it into a quick online form.  A farmer picks out their preferred loan term with the rate that is available  Once you hit submit, a decision can be made.  Once approved, funds can be accessed within days. You may or may not have a designated loan officer for all digital intermediaries – the goal is to get capital to farmers quickly, rather than spend more time working through your operation.

So, there are plenty of ways to get access to capital to buy farm land or get operating funds.  AFF is rapidly providing solutions to simplify and speed up the process for farmers, landowners, and investors alike.

Found the farmland you are interested in purchasing?

Now find your loan partner that will make it a reality. Get approved in seconds with an all digital application from AFF, who will work with you to make sure you get the best rates possible.

See My Rate

Farm Loans in Minnesota

Introduction

Farm sale prices are determined by a number of factors, two of which are the productivity (yield) and the rental income.  If a farm is able to produce more bushels of corn or beans compared to the farm down the road from it, it is worth more when it comes time to sell.  The same can be said about the rental income from a farm.  If your farmer pays you a more competitive rent compared to farms in the area, the farm is worth more in a sale.

Minnesota Average Corn Yield for 2021

  County State Year Commodity Average Value
1 Waseca Minnesota 2021 Corn 213.7
2 Watonwan Minnesota 2021 Corn 210.1
3 Freeborn Minnesota 2021 Corn 208.1
4 Steele Minnesota 2021 Corn 206.2
5 Sibley Minnesota 2021 Corn 203.9
6 Nobles Minnesota 2021 Corn 203.3
7 Blue Earth Minnesota 2021 Corn 201.5
8 Martin Minnesota 2021 Corn 195.3
9 Cottonwood Minnesota 2021 Corn 195
10 McLeod Minnesota 2021 Corn 194.4

Minnesota Average Cash Rent for 2021 – $177

Minnesota traditionally has competitive cash rents for non-irrigated tillable row crop farmland in the Midwest.  The average cash rent earned throughout the state in 2021 was $177 an acre.  Below is a chart of the highest average cash rents by county.  2021 Non-Irrigated Cash Rent County Leaderboards

  State County 2020 Avg. Cash Rent 2021 Avg. Cash Rent
1 Minnesota Sibley $249 $250
2 Minnesota Rock $224 $249
3 Minnesota Blue Earth $217 $238
4 Minnesota Faribault $223 $237
5 Minnesota Watonwan $226 $235
6 Minnesota Martin $221 $232
7 Minnesota Dodge $210 $232
8 Minnesota Le Sueur $221 $231
9 Minnesota Jackson $198 $229
10 Minnesota Mower $217 $229

When landowners and farmers calculate cash rent, one common method is the Return on Investment (ROI) approach.  In this method:  Rent = Value of Land/Acre X ROI (~2.5% – 4%) Here is an example of the ROI method:   Rent = $750,000/100 acre X 2.5% Rent = $10,000 X 2.5% (0.025) Rent = $250 per acre.   What this means:  If land has traditionally been under-rented compared to its potential yield productivity (bushels per acre) it can lower the overall value (price per acre) of a farm in the event of a sale.  This is why it is crucial to track cash rent and evaluate it compared to the productivity of the farm and track soil testing and nutrient application.

Minnesota Average Soil Productivity (PI) – 66.36 CPI

Minnesota has very productive soil for an array of agricultural purposes.  Minnesota is known for its corn, soybean, sugar beets, and wheat production. The Minnesota Crop Productivity Index (CPI) ratings provide a benchmark for different soil types and how well they are suited for row crop production. Soil ratings range from 0 to 100 in Minnesota. Like most soil rating scales, the closer to 100 translates to higher potential productivity for that soil. Here are the top 10 Counties by average soil PI in Minnesota:

  County State Crop Productivity Index
1 Nobles Minnesota 90
2 Chippewa Minnesota 89
3 Martin Minnesota 89
4 Traverse Minnesota 89
5 Cottonwood Minnesota 88
6 McLean Minnesota 88
7 Douglas Minnesota 88
8 Sibley Minnesota 88
9 Jackson Minnesota 87
10 Redwood Minnesota 87

Minnesota Average Farm Sales – 2021 – $8,200.93/acre

As one might suspect, the counties with the highest average yields, cash rent, and soil productivity are typically the highest counties in the state for average sale prices for farmland*.  All of these extremely important pieces of data about farmland go hand-in-hand.   Minnesota is known for its soil and crop diversity, growing different crops throughout the state to match the appropriate soil types. Land sale values will vary throughout the state to reflect this diversity.  The average sale price for the top 10 counties in Minnesota in 2021 was $8,200.93/acre.   Below is a chart showing the top 10 counties for average prices of farms for sale in Minnesota in 2021.

  County Sold Year Median Price per Acre Total Acres
1 Carver 2021 10,392.16 2,401.20
2 Scott 2021 9,859.61 4,708.70
3 Sherburne 2021 8,848.43 3,205.90
4 Wright 2021 7,951.09 6,108.10
5 Olmstead 2021 7,754.38 10,182.80
6 Jackson 2021 7,669.40 8,013.50
7 Nicollet 2021 7,512.01 7,131.60
8 Sibley 2021 7,490.18 8,852.80
9 Faribault 2021 7,488.48 10,848.30
10 Mower 2021 7,043.60 11,938.10

*We’ve removed sales of residential and development property to the best of our ability to accurately portray the sale values of farmland throughout the state.

Farm Loans in Minnesota

With all of this data about yield, cash rent, soil, and sale prices, the next step in one’s journey in farmland ownership and investment is, “how do I pay for it if it is such a valuable asset?”  Farm loans and mortgages are very common when investing in farmland or expanding your operation.  Unlike home mortgages, farm mortgages typically require 25%-35% of the purchase price of the farm as a down payment.  This can also be represented as a Loan-to-Value ratio.  Now, if you already own farmland with equity, you are able to pledge farmland as collateral for the new farm purchase which can lower the amount required for a down payment.   If you are ready to purchase your next farm you can explore our farm mortgage rates here and get a decision in 15 minutes without ever having to go to the bank and fill out pages upon pages of paperwork for an approval.

Found the farmland you are interesed in purchasing?

Now find your loan partner that will make it a reality. Get approved in seconds with an all digital application from AFF, who will work with you to make sure you get the best rates possible.

Farm Loans in Michigan

Introduction

Farm sale prices are determined by a number of factors, two of which are the productivity (yield) and the rental income. If a farm is able to produce more bushels of corn or beans compared to the farm down the road from it, it is worth more when it comes time to sell. The same can be said about the rental income from a farm. If your farmer pays you a more competitive rent compared to farms in the area, the farm is worth more in a sale.

Michigan Average Corn Yield for 2021

Michigan has a productive and consistent yield with a statewide average of 164.94 bushels per acre.  The average yield for the top 10 counties in Michigan is 192.37 bushels per acre.

  County State Year Commodity Average Value
1 Huron Michigan 2021 Corn 213
2 Sanilac Michigan 2021 Corn 212
3 Tuscola Michigan 2021 Corn 205.3
4 Monroe Michigan 2021 Corn 193.8
5 Arenac Michigan 2021 Corn 187.8
6 Bay Michigan 2021 Corn 187.8
7 Lenawee Michigan 2021 Corn 184.1
8 Midland Michigan 2021 Corn 182
9 Hillsdale Michigan 2021 Corn 179.1
10 Barry Michigan 2021 Corn 178.8

Michigan Average Cash Rent for 2021 – $85.93

Michigan has modest values for cash rent averages throughout the Midwest.  The average cash rent earned throughout the state in 2021 was $85.93 an acre.  Below is a chart of the highest average cash rents by county.

2021 Non-Irrigated Cash Rent County Leaderboards

  State County 2021 Avg. Cash Rent
1 Michigan Huron $215
2 Michigan Gratiot $162
3 Michigan Ionia $162
4 Michigan Tuscola $159
5 Michigan Monroe $151
6 Michigan Lenawee $149
7 Michigan Clinton $146
8 Michigan Ingham $136
9 Michigan Bay $134
10 Michigan Van Buren $134

The average cash rent of the top 10 cash rent earning counties in Michigan in 2021 was $154.80/acre. When landowners and farmers calculate cash rent, one common method is the Return on Investment (ROI) approach.  In this method:  Rent = Value of Land/Acre X ROI (~2.5% – 4%) Here is an example of the ROI method: Rent = $1,000,000/100 acre X 2.5% Rent = $10,000 X 2.5% (0.025) Rent = $250 per acre. What this means:  If land has traditionally been under-rented compared to its potential yield productivity (bushels per acre) it can lower the overall value (price per acre) of a farm in the event of a sale.  This is why it is crucial to track cash rent and evaluate it compared to the productivity of the farm and track soil testing and nutrient application.

Michigan Average Soil Productivity (PI) – 40.54 NCCPI

Michigan is agriculturally diverse due to the average quality of the soil in regards to productivity.  There are a multitude of types of crops grown and livestock raised.  The statewide average for soil productivity is 40.54. In all states (except Illinois, Iowa, and Minnesota) soil productivity ratings are determined by the overall NCCPI (National Commodity Crop Productivity Index) developed by the NRCS (Natural Resources Conservation Service) The average soil productivity in the top 10 most productive counties in Michigan is 58.6.

Here are the top 10 Counties by average soil in PI in Michigan:

  County State Crop Productivity Index
1 St. Clair Michigan 62
2 Sanilac Michigan 60
3 Shiawassee Michigan 60
4 Genesee Michigan 59
5 Macomg Michigan 59
6 Saginaw Michigan 58
7 Hillsdale Michigan 57
8 Ingham Michigan 57
9 Lenawee Michigan 57
10 Tuscola Michigan 57

Michigan Average Farm Sales – 2021 – $6,406.37/acre

As one might suspect, the counties with the highest average yields, cash rent, and soil productivity are usually the highest counties in the state for average sale prices for farmland*.  All of these extremely important pieces of data about farmland go hand-in-hand. The average sale price for the top 10 counties in Wisconsin in 2021 was $6,406.37/acre.  Below is a chart showing the top 10 counties for average sale prices offor farms for sale in Wisconsin in 2021.

*We’ve removed sales of residential and development property to the best of our ability to accurately portray the sale values of farmland throughout the state.

Farm Loans in Michigan

With all of this data about yield, cash rent, and soil the next step in one’s journey in farmland ownership and investment is, “how do I pay for it if it is such a valuable asset?” 

Farm mortgages are very common when investing in farmland or expanding your operation.  Unlike home mortgages, farm mortgages typically require 25%-35% of the purchase price of the farm as a down payment.  This can also be represented as a Loan-to-Value ratio.  Now, if you already own farmland with equity, you are able to pledge farmland as collateral for the new farm purchase which can lower the amount required for a down payment. If you are ready to purchase your next farm you can explore our farm mortgage rates here and get a decision in 15 minutes without ever having to go to the bank and fill out pages upon pages of paperwork for an approval.

Found the farmland you are interesting in purchasing?

Now find your loan partner that will make it a reality. Get approved in seconds with an all digital application from AFF, who will work with you to make sure you get the best rates possible.

Farm Loans In Wisconsin

Introduction

Farm sale prices are determined by a number of factors, two of which are the productivity (yield) and the rental income. If a farm is able to produce more bushels of corn or beans compared to the farm down the road from it, it is worth more when it comes time to sell. The same can be said about the rental income from a farm. If your farmer pays you a more competitive rent compared to farms in the area, the farm is worth more in a sale.

Wisconsin Average Corn Yield for 2021

  County State Year Commodity Average Value
1 Milwaukee Wisconsin 2021 Corn 185.7
2 Pepin Wisconsin 2021 Corn 176.8
3 Lafayette Wisconsin 2021 Corn 117.2
4 Grant Wisconsin 2021 Corn 115.15
5 Dodge Wisconsin 2021 Corn 111.25
6 Rock Wisconsin 2021 Corn 108.95
7 Green Wisconsin 2021 Corn 108.95
8 Fond du Lac Wisconsin 2021 Corn 108.75
9 Dane Wisconsin 2021 Corn 107.9
10 Columbia Wisconsin 2021 Corn 107.6

Wisconsin Average Cash Rent for 2021 – $138

Wisconsin reports solid and consistent cash rent year over year compared to other states in the Midwest. Although most tracts are smaller than other states, the land is productive and experiences consistent crops.

The average cash rent earned throughout the state in 2021 was $138 an acre. Below is a chart of the highest average cash rents by county.

The average cash rent of the top 10 cash rent earning counties in Wisconsin in 2021 was $186.80/acre.

2021 Non-Irrigated Cash Rent County Leaderboards

  State County 2020 Avg. Cash Rent 2021 Avg. Cash Rent
1 Wisconsin Lafayette $217 $214
2 Wisconsin Grant $209 $210
3 Wisconsin Brown $183 $190
4 Wisconsin Green $198 $183
5 Wisconsin Walworth $181 $181
6 Wisconsin Dane $182 $180
7 Wisconsin Rock $195 $179
8 Wisconsin Kewaunee $183 $178
9 Wisconsin Columbia $176 $177
10 Wisconsin Calumet $177 $176

 

When landowners and farmers calculate cash rent, one common method is the Return on Investment (ROI) approach. In this method: Rent = Value of Land/Acre X ROI (~2.5% – 4%)

Here is an example of the ROI method:

Rent = $1,000,000/100 acre X 2.5%
Rent = $10,000 X 2.5% (0.025)
Rent = $250 per acre.

What this means: If land has traditionally been under-rented compared to its potential yield productivity (bushels per acre) it can lower the overall value (price per acre) of a farm in the event of a sale. This is why it is crucial to track cash rent and evaluate it compared to the productivity of the farm and track soil testing and nutrient application.

Wisconsin Average Soil Productivity (PI) – 47.70 NCCPI


For most, Wisconsin is known for its rolling hills full of dairies that produce some of the best cheeses in America. But Wisconsin also produces its own fair amount of corn and soybeans with some of the most fertile land in the Midwest.

In all states (except Illinois, Iowa, and Minnesota) soil productivity ratings are determined by the overall NCCPI (National Commodity Crop Productivity Index) developed by the NRCS (Natural Resources Conservation Service)

The average soil productivity in the top 10 most productive counties in Wisconsin is 64.6.

 

 

 

Here are the top 10 Counties by average soil in PI In Wisconsin:

  County State Crop Productivity Index
1 Kenosha Wisconsin 70
2 Racine Wisconsin 70
3 Pierce Wisconsin 67
4 Dodge Wisconsin 65
5 Vernon Wisconsin 65
6 Crawford Wisconsin 64
7 Grant Wisconsin 63
8 Walworth Wisconsin 62
9 La Crosse Wisconsin 61
10 Iowa Wisconsin 59

 

 

Wisconsin Average Farm Sales – 2021 – $6,406.37/acre


As one might suspect, the counties with the highest average yields, cash rent, and soil productivity are usually the highest counties in the state for average sale prices for farmland*.  All of these extremely important pieces of data about farmland go hand-in-hand.  

The average sale price for the top 10 counties in Wisconsin in 2021 was $6,406.37/acre.  Below is a chart showing the top 10 counties for average sale prices offor farms for sale in Wisconsin in 2021.

 

 

 

  County Sold Year Median Price per Acre Total Acres
1 Kenosha 2021 9,962.96 11,839.00
2 Ozaukee 2021 7,880.63 5,556.20
3 Washington 2021 7,500.00 14,095.00
4 Walworth 2021 6,552.23 25,019.00
5 Racine 2021 5,833.33 10,251.00
6 Brown 2021 5,681.82 16,258.00
7 Sheboygan 2021 5,570.97 18,101.00
8 Dane 2021 5,147.06 40,371.00
9 Lafayette 2021 5,059.65 34,732.00
10 Calumet 2021 4,875.00 13,012.00

*We’ve removed sales of residential and development property to the best of our ability to accurately portray the sale values of farmland throughout the state.

 

 

 

 

Farm Loans in Wisconsin

With all of this data about yield, cash rent, soil, and sale prices, the next step in one’s journey in farmland ownership and investment is, “how do I pay for it if it is such a valuable asset?”  Farm mortgages are very common when investing in farmland or expanding your operation.  Unlike home mortgages, farm mortgages typically require 25%-35% of the purchase price of the farm as a down payment.  This can also be represented as a Loan-to-Value ratio.  Now, if you already own farmland with equity, you are able to pledge farmland as collateral for the new farm purchase which can lower the amount required for a down payment. 

If you are ready to purchase your next farm you can explore our farm mortgage rates here and get a decision in 15 minutes without ever having to go to the bank and fill out pages upon pages of paperwork for an approval.

 

 

Found the farmland you are interesting in purchasing?

Now find your loan partner that will make it a reality. Get approved in seconds with an all digital application from AFF, who will work with you to make sure you get the best rates possible.

See My Rate

Farm Loans In Illinois

Introduction

Farm sale prices are determined by a number of factors, two of which are the productivity (yield) and the rental income. If a farm is able to produce more bushels of corn or beans compared to the farm down the road from it, it is worth more when it comes time to sell. The same can be said about the rental income from a farm. If your farmer pays you a more competitive rent compared to farms in the area, the farm is worth more in a sale.

Illinois Average Corn Yield for 2021

Farmland in Illinois that sells for the highest price is more than likely the most productive land when discussing corn and soybean yields.  Here is a list of the top 10 counties in Illinois by corn yield (bushel per acre) in the 2021 growing season.

  County State Year Commodity Average Value
1 Champaign Illinois 2021 Corn 222.4
2 Moultrie Illinois 2021 Corn 221.8
3 Macon Illinois 2021 Corn 221.1
4 Woodford Illinois 2021 Corn 220.2
5 Coles Illinois 2021 Corn 220
6 Christian Illinois 2021 Corn 218.6
7 Stark Illinois 2021 Corn 217.2
8 Sangamon Illinois 2021 Corn 215.6
9 Peoria Illinois 2021 Corn 215
10 Marshall Illinois 2021 Corn 214.5

Illinois Average Cash Rent for 2021 – $227


Illinois typically has some of the highest and most competitive cash rents for non-irrigated tillable row crop farmland in the Midwest.  The average cash rent earned throughout the state in 2021 was $227 an acre.  Below is a chart of the highest average cash rents by county.

2021 Non-Irrigated Cash Rent County Leaderboards

  State County 2020 Avg. Cash Rent 2021 Avg. Cash Rent
1 Illinois Macon $294 $311
2 Illinois Moultrie $284 $297
3 Illinois Piatt $281 $297
4 Illinois Logan $287 $291
5 Illinois Sangamon $292 $280
6 Illinois Christian $272 $278
7 Illinois Menard $260 $278
8 Illinois De Witt $266 $275
9 Illinois Champaign $274 $270
10 Illinois Carroll $264 $268

When landowners and farmers calculate cash rent, one common method is the Return on Investment (ROI) approach.  In this method:  Rent = Value of Land/Acre X ROI (~2.5% – 4%)

Here is an example of the ROI method:

Rent = $1,000,000/100 acre X 3%
Rent = $10,000 X 3% (0.03)
Rent = $300 per acre.

What this means:  If land has traditionally been under-rented compared to its potential yield productivity (bushels per acre) it can lower the overall value (price per acre) of a farm in the event of a sale.  This is why it is crucial to track cash rent and evaluate it compared to the productivity of the farm and track soil testing and nutrient application.

Illinois Average Soil Productivity (PI) – 110 CPI

Illinois has some of the best soil in the world, let alone the Midwest.  Central Illinois and North Central Illinois farmland are home to the best soil productivity in the state.  Prime agricultural land classes (Class A, Class B, and Class C) soil types can be categorized as follows:

Class A:  133-147 CPI

Class B:  117-132

Class C:  100-116

Soil ratings equal to or below 99 on the CPI are not classified as prime agricultural land.

Here are the top 10 Counties by average soil PI in Illinois:

  County State Crop Productivity Index
1 Piatt Illinois 135
2 Macon Illinois 134
3 Champaign Illinois 133
4 DeKalb Illinois 133
5 Logan Illinois 131
6 McLean Illinois 131
7 Douglas Illinois 130
8 LaSalle Illinois 129
9 Woodford Illinois 129
10 Kendall Illinois 128

Illinois Average Farm Sales – 2021 – $11,394/acre

As one might suspect, the counties with the highest average yields, cash rent, and soil productivity are the highest counties in the state for average sale prices for farmland.  All of these extremely important pieces of data about farmland go hand-in-hand.  Illinois is known for its renowned soils and agricultural production and this is reflected in the land sale values.  The average sale price for the top 10 counties in Illinois in 2021 was $11,394/acre.  Below is a chart showing the top 10 counties for average sale prices for farms in Illinois in 2021.

  County Sold Year Median Price per Acre Total Acres
1 Kane 2021 15,821.21 5,064.79
2 Macon 2021 11,515.15 3,021.12
3 Marshall 2021 11,433.23 4,406.59
4 Champaign 2021 11,305.305 12,831.15
5 Woodford 2021 11,236.38 4,579.40
6 Sangamon 2021 11,000 8,891.99
7 De Witt 2021 10,654.76 4,221.90
8 DeKalb 2021 10,405.595 9,385.65
9 McLean 2021 10,325.905 15,110.97
10 Ford 2021 10,251.24 4,503.23

Farm Loans in Illinois

With all of this data about yield, cash rent, soil, and sale prices, the next step in one’s journey in farmland ownership and investment is, “how do I pay for it if it is such a valuable asset?”  Farm mortgages are very common when investing in farmland or expanding your operation.  Unlike home mortgages, farm mortgages typically require 25%-35% of the purchase price of the farm as a down payment.  This can also be represented as a Loan-to-Value ratio.  Now, if you already own farmland with equity, you are able to pledge farmland as collateral for the new farm purchase which can lower the amount required for a down payment.

If you are ready to purchase your next farm you can explore our farm mortgage rates here and get a decision in 15 minutes without ever having to go to the bank and fill out pages upon pages of paperwork for an approval.

Found the farmland you are interested in purchasing?

Now find your loan partner that will make it a reality. Get approved in seconds with an all-digital application from AFF, who will work with you to make sure you get the best rates possible.