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The information content of farmland value surveys

Author

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  • Todd H. Kuethe
  • Jennifer Ifft

Abstract

Purpose - Farmland plays a critical role in the financial health of the agricultural sector. As a result, a number of institutions closely monitor farm real estate markets and publicly report estimated farmland values. This study aims to compare the information content of reported farmland values from three institutions. Design/methodology/approach - A state space model is formulated to link observed price estimates to the unobservable value of farmland. The model considers reported values over the period 1965‐2010 for Iowa from three surveys: Iowa State Extension Service, the Federal Reserve, and the USDA. Findings - The values reported by Iowa State receive the greatest weight in estimating the unobservable market value, yet the appreciation rates implied by the USDA estimates most closely track those of the unobservable value. Originality/value - This study is the first to estimate the unobservable value of farm real estate based on observed estimates. The empirical procedure offers a number of unique advantages. It combines information from data reported at both annual and quarterly intervals and addresses potential problems related to cointegration, nonstationarity, and nonlinearity.

Suggested Citation

  • Todd H. Kuethe & Jennifer Ifft, 2013. "The information content of farmland value surveys," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 73(1), pages 45-57, May.
    • Handle: RePEc:eme:afrpps:v:73:y:2013:i:1:p:45-57
    DOI: 10.1108/00021461311321302
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    Citations

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    Cited by:

    1. Williams, John & McSweeney, Peter & Salmon, Robert, 2014. "Australian Farm Investment: Domestic and Overseas Issues," Papers 234408, University of Melbourne, Melbourne School of Land and Environment.
    2. Nittai K Bergman & Rajkamal Iyer & Richard T Thakor & Philip Strahan, 2020. "The Effect of Cash Injections: Evidence from the 1980s Farm Debt Crisis [A crisis of banks as liquidity providers]," Review of Financial Studies, Society for Financial Studies, vol. 33(11), pages 5092-5130.
    3. Nittai K. Bergman & Rajkamal Iyer & Richard T. Thakor, 2015. "Financial Accelerator at Work: Evidence from Corn Fields," NBER Working Papers 21086, National Bureau of Economic Research, Inc.

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