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Comparison of alternative sources of farmland values

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  • Christopher Zakrzewicz
  • B. Wade Brorsen
  • Brian C. Briggeman

Abstract

Purpose – Consistent and reliable data on farmland values is critical to assessing the overall financial health of agricultural producers. However, little is known about the idiosyncrasies and similarities of standard land value data sources – US Department of Agriculture (USDA), Federal Reserve Bank land value surveys, and transaction prices. The purpose of this paper is to determine the differences and similarities of land value movements from three land value data sources. Design/methodology/approach – In addition to Oklahoma transaction prices, two survey sources are considered: the USDA annual report and the quarterly Tenth District Survey of Agricultural Credit Conditions administered by the Federal Reserve Bank of Kansas City. The paper describes each data set and identifies differences in data sampling, collection, and reporting. Average values of Oklahoma farmland across data sources are examined. USDA estimates are regressed against quarterly Federal Reserve values across multiple states to determine the point in time represented by USDA estimates. Granger causality tests determine if Federal Reserve land value estimates anticipate movements in USDA land value estimates. Findings – It is found that all three data sources are highly correlated, but transaction prices tend to be higher, especially for irrigated cropland and ranchland. USDA land values are reported as representing land values on January first, but instead they more closely represent first and second quarter land values according to a multi-state comparison to changes in quarterly Federal Reserve land values. Given the finding that first quarter Federal Reserve Bank land values lead USDA land values and that they are published before the USDA release, Federal Reserve land values are a timely indicator of agricultural producers' financial position. Originality/value – No previous research has addressed the topic of how various sources of agricultural land values compare. JEL classification: G32, Q14

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal Agricultural Finance Review.

Volume (Year): 72 (2012)
Issue (Month): 1 (March)
Pages: 68-86

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Handle: RePEc:eme:afrpps:v:72:y:2011:i:1:p:68-86

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Related research

Keywords: Agricultural land; Agriculture; Farmland; Land; Land value; Prices; United States of America;

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References

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  1. Titus O. Awokuse & Joshua M. Duke, 2006. "The Causal Structure of Land Price Determinants," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 54(2), pages 227-245, 06.
  2. Pam Guiling & B. Wade Brorsen & Damona Doye, 2009. "Effect of Urban Proximity on Agricultural Land Values," Land Economics, University of Wisconsin Press, vol. 85(2), pages 252-264.
  3. Pamela Guiling & Damona Doye & B. Wade Brorsen, 2009. "Agricultural, recreational and urban influences on agricultural land prices," Agricultural Finance Review, Emerald Group Publishing, vol. 69(2), pages 196-205, July.
  4. Vincent E. Breneman & Richard F. Nehring, 2006. "Urban Sprawl and Farmland Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 915-929.
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  9. Livanis, Grigorios T. & Moss, Charles B. & Breneman, Vincent E. & Nehring, Richard F., 2005. "Urban Sprawl and Farmland Prices," Working Papers 15657, University of Florida, International Agricultural Trade and Policy Center.
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  11. Herriges, Joseph A. & Shogren, Jason F., 1992. "The Implicit Value of Corn Base Acreage," Staff General Research Papers 10788, Iowa State University, Department of Economics.
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  13. Flanders, Archie & White, Fred C. & Escalante, Cesar L., 2004. "Comparing Land Values And Capitalization Of Cash Rents For Cropland And Pasture In Georgia," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34614, Southern Agricultural Economics Association.
  14. Leah J. Tsoodle & Bill B. Golden & Allen M. Featherstone, 2006. "Factors Influencing Kansas Agricultural Farm Land Values," Land Economics, University of Wisconsin Press, vol. 82(1), pages 124-139.
  15. Leah J. Tsoodle & Allen M. Featherstone & Bill B. Golden, 2007. "Combining hedonic and negative exponential techniques to estimate the market value of land," Agricultural Finance Review, Emerald Group Publishing, vol. 67(2), pages 225-239, September.
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  17. Henderson, Jason R. & Moore, Sean, 2006. "The Capitalization of Wildlife Recreation Income into Farmland Values," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(03), December.
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Cited by:
  1. Schurle, Bryan & Featherstone, Allen & Wilson, Christine & Crossan, Dylan, 2013. "Land Prices During Periods of Rapid Change," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.

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