Will farmland values keep booming?
Lean supplies, strong export activity, and vibrant demand both at home and abroad have pushed crop prices to record highs, offsetting today’s spiraling production costs. As a result, farm profits and investments have soared, and farmland values have boomed. ; But commodity markets in agriculture can change directions abruptly—and so agricultural bankers and farm analysts naturally question the sustainability of today’s prosperity. The current agriculture boom is strikingly similar to those of the 1970s and mid-1990s, when the good times quickly faded as crop supplies increased, the dollar strengthened, and export activity weakened. One particular danger is that rising farmland values could be accompanied by greater financial leverage, increasing the industry’s vulnerability to a drop in income, as in the 1980s. ; Henderson discusses current farmland value trends and analyzes the factors underlying the recent surge. He concludes that the recent surge in farmland values tracks expected gains in crop returns. At the same time, however, an unexpected surge in production costs or a drop in crop prices could undercut farmland values and pose a financial risk to the farm sector. Thus far, however, the industry’s debt levels are up only modestly, helping to mitigate the risks of a drop in farm incomes.
Volume (Year): (2008)
Issue (Month): Q II ()
|Contact details of provider:|| Postal: One Memorial Drive, Kansas City, MO 64198|
Phone: (816) 881-2254
Web page: http://www.kansascityfed.org
More information through EDIRC
|Order Information:|| Email: |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Henderson, Jason R. & Gloy, Brent A., 2008. "The Impact of Ethanol Plants on Cropland Values in the Great Plains," Working Papers 51080, Cornell University, Department of Applied Economics and Management.
- Duffy, Michael & Johanns, Ann M., 2005. "Estimated Returns to Iowa Farmland," Staff General Research Papers Archive 12396, Iowa State University, Department of Economics.
- Charles H. Barnard & Gerald Whittaker & David Westenbarger & Mary Ahearn, 1997. "Evidence of Capitalization of Direct Government Payments into U.S. Cropland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1642-1650.
- Russell L. Lamb & Jason Henderson, 2000. "FAIR Act Implications for Land Values in the Corn Belt," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 22(1), pages 102-119.
- Henderson, Jason R. & Gloy, Brent A., 2008. "The Impact of Ethanol Plants on Land Values in the Great Plains," Proceedings: 2007 Agricultural and Rural Finance Markets in Transition, October 4-5, 2007, St. Louis, Missouri 48148, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
- Duffy, Michael & Holste, Ann, 2005. "Estimated Returns to Iowa Farmland," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers.
When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2008:i:qii:p:81-104:n:v.93no.2. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LDayrit)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.