The average cost of Illinois farmland has reached $5,000 an acre for the first time after the fourth-year in a row of double-digit price increases, said a report released Tuesday by the University of Illinois.

The figure includes the value of a land and buildings based on a U.S. Department of Agriculture survey of farmers.

“Commodity prices have been cited as the main factor. The earnings from farms are driving the land prices,” said Dale Lattz with the U of I Department of Agricultural and Consumer Economics.

The $5,000 average for 2008 was up 15.5 percent from 2007. It also was the biggest year-to-year increase since 1977. Farm real-estate values have been up every year since 1988, according to the USDA report.

Lattz said there are other factors driving farmland investments, including the weak stock market, but most of the increase appears to be based on expectations of continued increases in corn and soybean prices.

“I think they’ve (USDA) been a little behind…depending on where you are, we may be peaking in another year or two,” said Lattz.

While rising land values are good for established farmers, Lattz said higher prices make it harder to break into the business.

“It makes it difficult for the younger ones, if you’re somebody who has to come up with a pretty large down payment,” he said.

Tim Landis can be reached at (217) 788-1536 or tim.landis@sj-r.com.

Average Illinois farmland values and percentage increase 1998-2008
--1998: $2,130; 7.6
--1999: $2,220; 4.2
--2000: $2,260; 1.8
--2001: $2,290; 1.3
--2002: $2,350; 2.6
--2003: $2,430; 3.4
--2004: $2,610; 7.4
--2005: $3,330; 27.6
--2006: $3,800; 14.1
--2007: $4,330; 13.9
--2008: $5,000; 15.5