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Comparison Of Michigan Farmland Returns To Nonfarm Investments

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  • Hepp, Ralph E.

Abstract

Farmland is both a financial investment and a production resource when it is used by the farm family in generating income for the business. The resource is used in producing crops for sale or feed for animals. The basic choices for controlling land are ownership and lease. Land leases allows the control of land for income generation, but it does not allow the lessor to participation in the investment characteristics of the property. Land ownership provides a means for gaining income for the business as well as capital gains for the owner's wealth accumulation. Agricultural land prices increased for almost 50 years until the agricultural financial crisis in the 1980's halted the upward movement in values. From 1981 to 1987, Michigan farmland prices decreased 37 percent. How does the return to farmland compare to the yield from nonfarm investments in the last 10 years? Is agricultural land a good investment? The purpose of this article is an evaluation of investment returns from Michigan farmland for the owners, and a comparison of the returns over time with competing long-term nonfarm investments.

Suggested Citation

  • Hepp, Ralph E., 1996. "Comparison Of Michigan Farmland Returns To Nonfarm Investments," Staff Paper Series 11825, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    • Handle: RePEc:ags:midasp:11825
    DOI: 10.22004/ag.econ.11825
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    Keywords

    Land Economics/Use;

    Statistics

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