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How Cropland Contract Type And Term Decisions Are Made: Evidence From An Arkansas Tenant Survey

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  • Bierlen, Ralph W.
  • Parsch, Lucas D.
  • Dixon, Bruce L.

Abstract

This study examines land contract decision-making with the use of an eastern Arkansas data set. Estimated probit models used to test contract choice hypotheses support a credit constraint hypothesis, indicating that contract choice is based on: 1) the tenant's financial position and operating expense levels, 2) the size of the operation; 3) alternative uses of agricultural land; and 4) the supply of contracted land. Results indicate limited support for the agency problem hypothesis and reject the risk aversion and farmers managerial ability hypotheses. Regression equations used to select lease term hypotheses indicate that cash rent levels are sensitive to land quality, supply of contract acres, irrigation, and crop produced. Tenant shares of the crop and variable costs are less sensitive to land quality than cash rents. Other variables that influence tenant shares of the crop and variable costs include tenant/landlord social capital, the supply of contracted acres, and crop selection.

Suggested Citation

  • Bierlen, Ralph W. & Parsch, Lucas D. & Dixon, Bruce L., 1999. "How Cropland Contract Type And Term Decisions Are Made: Evidence From An Arkansas Tenant Survey," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 2(1), pages 1-19.
    • Handle: RePEc:ags:ifaamr:34353
    DOI: 10.22004/ag.econ.34353
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    1. Barry, Peter J. & Escalante, Cesar L. & Moss, Leeann E., 2002. "Rental Premiums For Share Versus Cash Leases," 2002 Annual meeting, July 28-31, Long Beach, CA 19684, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Alexander März & Nadja Klein & Thomas Kneib & Oliver Musshoff, 2016. "Analysing farmland rental rates using Bayesian geoadditive quantile regression," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(4), pages 663-698.
    3. Breustedt, Gunnar & Habermann, Hendrik, 2010. "Einfluss Der Biogaserzeugung Auf Landwirtschaftliche Pachtpreise In Deutschland," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93937, German Association of Agricultural Economists (GEWISOLA).
    4. Breustedt, Gunnar & Habermann, Hendrik, 2009. "Determinants of Agricultural Cash Rents in Germany: A Spatial Econometric Analysis for Farm-Level Data," 2009 Conference, August 16-22, 2009, Beijing, China 51685, International Association of Agricultural Economists.
    5. Rainey, Ronald L. & Dixon, Bruce L. & Ahrendsen, Bruce L. & Parsch, Lucas D. & Bierlen, Ralph W., 2001. "Contract Choice Selection With Land-Leasing Agreements," 2001 Annual meeting, August 5-8, Chicago, IL 20644, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Størdal, Ståle & Lien, Gudbrand & Baardsen, Sjur, 2008. "Analyzing determinants of forest owners' decision-making using a sample selection framework," Journal of Forest Economics, Elsevier, vol. 14(3), pages 159-176, June.
    7. Du, Xiaoxue & Lu, Liang & Zilberman, David, 2013. "The Economics of Contract Farming: A Credit and Investment Perspective," 2014 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161657, Agricultural and Applied Economics Association.
    8. Breustedt, Gunnar & Habermann, Hendrik, 2008. "Determinants of agricultural cash rents in Germany: A spatial econometric analysis for farm-level data," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44462, European Association of Agricultural Economists.
    9. Ma, X. & Zhou, Y. & Heerink, N. & Shi, X. & Liu, H., 2018. "Tenure security, social relations and contract choice: Endogenous matching in the Chinese land rental market," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277478, International Association of Agricultural Economists.
    10. Rainey, Ronald L. & Dixon, Bruce L. & Ahrendsen, Bruce L. & Parsch, Lucas D. & Bierlen, Ralph W., 2005. "Arkansas Landlord Selection of Land-Leasing Contract Type and Terms," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 8(1), pages 1-19.
    11. Wendyam Ulrich Wilfried Zombre & Emmanuelle Bouquet & Jean-Philippe Colin, 2013. "Contraintes de financement et choix contractuel sur le marché du faire-valoir indirect à Madagascar," Post-Print hal-02748863, HAL.
    12. Adewale Henry Adenuga & Claire Jack & Ronan McCarry, 2021. "The Case for Long-Term Land Leasing: A Review of the Empirical Literature," Land, MDPI, vol. 10(3), pages 1-21, March.
    13. Ruifeng Liu & Zhifeng Gao & Yefan Nian & Hengyun Ma, 2020. "Does Social Relation or Economic Interest Affect the Choice Behavior of Land Lease Agreement in China? Evidence from the Largest Wheat−Producing Henan Province," Sustainability, MDPI, vol. 12(10), pages 1-19, May.
    14. Hennig Solveigh & Breustedt Gunnar, 2018. "The Incidence of Agricultural Subsidies on Rental Rates for Grassland," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(2), pages 125-156, April.

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