Strong demand for farmland translated into 20% to 21% annual increases on average across the state of Illinois in 2011, according to the annual survey conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers (ISPFMRA).

Don McCabe, AFM, Soy Capital Ag Services, Bourbonnais, and chair of the survey, cites increasing farm income returns and expectations of strong future income as the dominant driver behind the exceptional rise in values.

The powerful gain seen in 2011 compares to average yearly annual increases of 6.7% across Illinois from 1970 through 2011, says Dr. Gary Schnitkey, University of Illinois ag economist who assists with the survey. Yearly increases have averaged 12% from 2005 to 2011, he adds.

McCabe notes excellent to good farmland hit $8,000 to $9,000 an acre just a year earlier at the end of 2010.

Last summer's mid-year survey indicated land values had risen 10% to 15% the first six months of 2011, with the best-quality land surpassing $10,000 an acre. Prices moved even higher by the end of 2011, he observes.

Respondents remain generally positive toward future price increases - 68% expect farmland price increases to average between 0% and 5% over the next five years while only 6% expect a decline.

But respondents are somewhat more cautious compared to a year earlier. Last year's survey found no one expected farmland values would decline by 20% in 2011. This year, 12% think there is more than a 10% chance of a 20% drop in values in 2012.