AEI Investigates: Are Most Farmland Purchases Debt-Free?

When it comes to farmland purchases, how often is debt part of the equation? 

Recent research by Agricultural Economic Insights (AEI) experts Randy Dickhut and David Widmar dives into this question, using exclusive data from Acres.com to uncover how debt factors into Illinois farmland sales. 

Analyzing lien data from 2021 to 2023, they reveal surprising regional patterns and notable variations in debt usage—insights that challenge the common notion that most farmland purchases are debt-free.

Note: Liens filed at purchase do not reflect the entirety of farmland debt, so though this data provides useful insights, it is limited.

Read on for three key findings that offer a fresh perspective on debt in farmland transactions across Illinois counties.

Key Takeaways

Debt Use Varies by Total Acreage
From 2021 to 2023, 51% of Illinois farmland purchases had a lien recorded at closing. This share dipped from 53% in 2021 to 47% in 2023. When looking at the total acreage with liens, the percentage is slightly lower. This suggests buyers of smaller parcels are more likely to use debt.

Counties With More Farmland Sales Tend to Have More Liens
County-level data shows debt usage isn't uniform across Illinois. Counties with more farmland sales tend to have more liens, following an upward trend. Interestingly, counties above the trendline—where debt use is higher—are mainly in central and northwestern Illinois.

Farmland Mortgage Utilization Index Reveals Regional Variability
Using the data to create a farmland mortgage utilization index, this research shows regional differences in how much debt buyers use. The bottom 10% of counties for debt utilization had less than 38% of farmland transactions with a reported lien. In contrast, the top 10% had more than 68% of transactions with a lien.

Final Thoughts

Acres’ data reveals county- and regional-level variability in debt utilization for farmland purchases, allowing a more nuanced view of trends over time. For the full story and a deeper dive into these findings, be sure to check out the complete AEI article by Randy Dickhut and David Widmar.