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Do Wealth Gains from Land Appreciation Cause Farmers to Expand Acreage or Buy Land?

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  • Weber, Jeremy G.
  • Key, Nigel D.

Abstract

Recent increases in farm real estate values in the U.S. have increased farm equity in the form of unrealized capital gains. Exploiting periods of high and low appreciation that caused different increases in wealth for farmers owning different shares of their farmland, we examine if U.S. grain farmers expanded their acres harvested or acres owned in response to an increase in their land wealth. We find that land wealth had little effect on farm size. However, for farms of a similar size, owning 10 percentage points more land increased the growth rate of land owned by 2 percentage points. Because older farmers own a larger share of the land in the farm, an increase in the rate of land appreciation slows the rate at which younger farmers acquire land relative to older farmers.

Suggested Citation

  • Weber, Jeremy G. & Key, Nigel D., 2013. "Do Wealth Gains from Land Appreciation Cause Farmers to Expand Acreage or Buy Land?," 2014 Allied Social Science Association (ASSA) Annual Meeting, January 3-5, 2014, Philadelphia, PA 161893, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaeass:161893
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    Cited by:

    1. Mukasa Adamon N. & Anthony M. Simpasa & Adeleke Oluwole Salami, 2017. "Working Paper 247 - Credit constraints and farm productivity: Micro-level evidence from smallholder farmers in Ethiopia," Working Paper Series 2356, African Development Bank.
    2. Kapinos, Pavel & Gurley-Calvez, Tami & Kapinos, Kandice, 2016. "(Un)expected housing price changes: Identifying the drivers of small business finance," Journal of Economics and Business, Elsevier, vol. 84(C), pages 79-94.
    3. Czyżewski, Bazyli & Trojanek, Radosław, 0. "Drivers of agricultural land prices in terms of different functions of rural areas in Poland," Problems of Agricultural Economics, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
    4. Cowley, Cortney, 2016. "The Dispersion of Farmland Values in the Tenth District," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 29-67.

    More about this item

    Keywords

    farmland appreciation; wealth; land ownership; farm size; Agribusiness; Land Economics/Use; Q15; Q12;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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