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Relating Ranch Prices and Grazing Permit Values to Ranch Productivity

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  • William E. Martin
  • Gene L. Jefferies

Abstract

Costs and returns research on western cattle ranches invariably shows low or negative net returns. Yet ranch sale values, including the sale values of public grazing permits, remain at high levels. There appears to be confusion in either the facts or their evaluation. This confusion carries over into public-grazing-fee policy. The authors offer the hypothesis that not all "outputs" produced by an investment in a cattle ranch have been included in previous conventional analyses. Since these additional outputs are as much a part of the return on investment as is the output beef, they should be considered in evaluating use fees on public lands. Measurement of these extra marginal value products not directly associated with the utilization of grass is difficult. Therefore, the total MVP of the bundle of resources is estimated by the use of regression analysis with information on actual ranch sales as data. These estimates, when compared with data from other sources, give insights into the relative importance of several motives for purchasing a ranch. A policy conclusion is that change to a bidding procedure in setting use fees would be desirable.

Suggested Citation

  • William E. Martin & Gene L. Jefferies, 1966. "Relating Ranch Prices and Grazing Permit Values to Ranch Productivity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(2), pages 233-242.
    • Handle: RePEc:oup:ajagec:v:48:y:1966:i:2:p:233-242.
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    File URL: http://hdl.handle.net/10.2307/1236214
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    Citations

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    Cited by:

    1. Ronald W. Spahr & Mark A. Sunderman, 1999. "Valuation of Property Surrounding a Resort Community," Journal of Real Estate Research, American Real Estate Society, vol. 17(2), pages 227-244.
    2. José L Oviedo & Pablo Campos & Alejandro Caparrós, 2022. "Contingent valuation of landowner demand for forest amenities: application in Andalusia, Spain," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(3), pages 615-643.
    3. Ronald W. Spahr & Mark A. Sunderman, 2009. "A Model for Federal Public Land Surface Rights' Management," Journal of Real Estate Research, American Real Estate Society, vol. 31(2), pages 119-146.
    4. Jose L. Oviedo & Lynn Huntsinger & Pablo Campos & Alejandro Caparrós, 2011. "Assessing the income value of private amenities in California oak woodlands," Working Papers 1110, Instituto de Políticas y Bienes Públicos (IPP), CSIC.
    5. Swanepoel, G.D. & Hadrich, Joleen & Goemans, Christopher, 2015. "Estimating the Contribution of Groundwater Irrigation to Farmland Values in Phillips County, Colorado," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2015, pages 1-14.
    6. Rimbey, Neil R. & Darden, Tim D. & Gibson, Chad & Harp, Aaron J., 1999. "Costs And Returns Of Cattle Ranches And Other Agriculture In Owyhee County, Idaho," A.E. Extension Series 305003, University of Idaho, Department of Agricultural Economics and Rural Sociology.
    7. Campos, Pablo & Caparros, Alejandro, 2006. "Social and private total Hicksian incomes of multiple use forests in Spain," Ecological Economics, Elsevier, vol. 57(4), pages 545-557, June.
    8. Torell, L. Allen & Doll, John P., 1991. "Public Land Policy And The Value Of Grazing Permits," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(1), pages 1-11, July.
    9. Ronald W. Spahr & Mark A. Sunderman, 1995. "Additional Evidence on the Homogeneity of the Value of Government Grazing Leases and Changing Attributes for Ranch Values," Journal of Real Estate Research, American Real Estate Society, vol. 10(5), pages 601-616.
    10. Unknown, 1998. "References/Literature Cited," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    11. Mark A. Sunderman & Ronald W. Spahr & John W. Birch & Russell M. Oster, 2000. "Impact of Ranch and Market Factors on an Index of Agricultural Holding Period Returns," Journal of Real Estate Research, American Real Estate Society, vol. 19(2), pages 209-234.
    12. Mark A. Sunderman & Ronald W. Spahr, 1994. "The Valuation of Undeveloped Land: A Reconciliation of Methods," Journal of Real Estate Research, American Real Estate Society, vol. 9(2), pages 179-196.
    13. Martin, William E. & Tinney, J. Craig & Gum, Russell L., 1978. "Comparing Estimates of Market and Nonmarket Values for Products of a Given Land Base," Economics Statistics and Cooperative Services (ESCS) Reports 329532, United States Department of Agriculture, Economic Research Service.

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