Does a Rising Biofuels Tide Raise All Boats? A Study of Cash Rent Determinants for Iowa Farmland under Hay and Pasture
Iowa's farmland consists of over 16% hay crops and pastureland, a significant portion of which is under cash rental contracts. This study investigates the comparative relationships between cash rental rates for cropped land and non-cropped land, where the latter includes hay and pastureland. We find that higher crop prices resulting from biofuel demand induces land use conversion from non-cropped land to crop production and thus bids up non-cropped land rents. Compared with changes in cropped land cash rents, non-cropped farmland rents could increase by a higher percentage. Non-cropped land cash rental rates are largely determined by crop and feeder cattle prices, population density, soil quality, and proportion of non-cropped land in a specific area. A primary effect of ethanol subsidies is the redistribution of income between corn growers and livestock producers, whereby higher livestock feed costs together with increasing hay and pastureland cash rents harm the dairy and feedlot beef sectors. Our study shows that, because of the positive effect on rents, the policies have an indeterminate effect on landowners operating in the cow-calf sector.
|Date of creation:||Oct 2008|
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- Xiaodong Du & David A. Hennessy & William M. Edwards, 2007.
"Determinants of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory,"
Center for Agricultural and Rural Development (CARD) Publications
07-wp454, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Du, Xiaodong & Hennessy, David A. & Edwards, William M., 2008. "Determinants of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6355, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Lence, Sergio H. & Mishra, Ashok K., 2003.
"The Impacts of Different Farm Programs on Cash Rents,"
Staff General Research Papers Archive
11470, Iowa State University, Department of Economics.
- Sergio H. Lence & Ashok K. Mishra, 2003. "The Impacts of Different Farm Programs on Cash Rents," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 753-761.
- Jonathan Yoder & Ishrat Hossain & Francis Epplin & Damona Doye, 2005.
"Contract Duration and the Division of Labor in Agricultural Land Leases,"
2005-5, School of Economic Sciences, Washington State University.
- Yoder, Jonathan & Hossain, Ishrat & Epplin, Francis & Doye, Damona, 2008. "Contract duration and the division of labor in agricultural land leases," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 714-733, March.
- Jonathan Yoder & Ishrat Hossain & Francis Eppin, 2005. "Contract Duration and the Division of Labor in Agricultural Land Leases," Others 0506011, EconWPA.
- Jonathan Yoder & Ishrat Hossain & Francis Eppin & Damona Doye, 2005. "Contract Duration and the Division of Labor in Agricultural Land Leases," Working Papers 2005-6, School of Economic Sciences, Washington State University.
- Lyubov A. Kurkalova & Christopher Burkart & Silvia Secchi, 2004. "Cropland Cash Rental Rates in the Upper Mississippi River Basin," Center for Agricultural and Rural Development (CARD) Publications 04-tr47, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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