After several years of successively rising land values and cash rents, Nebraska’s farmlandmarkets throttled back during 2008. Preliminary results from the University of Nebraska-Lincoln’s 2009 Nebraska Farm Real Estate Market Survey show a clear picture of the market mood turning very cautious in response to the U.S. and global economic downturns. As of February 1, 2009, the weighted average value of Nebraska farmland was $1,424 per acre, identical to the year-earlier level (Figure 1 and Table 1 at end of article). Likewise, estimated 2009 cash rents are stable to slightly down from 2008 levels throughout most of the state.
the agglomeration effects of subsidized renewable energy production (e.g., Hennig and Latacz-Lohmann 2016; Towe and Tra 2013), and the local or regional market regulations (e.g., Lawley 2018).
The majority of farmland price studies have implicitly acknowledged remaining price variation by means of spatio-temporal effects (e.g., Maddison 2009), but that are hardly generalizable. Few studies have explored agent-specific prices due to thinness, such as price-sensitivity to farmer-buyer characteristics (e.g., Kuethe and Bigelow 2018) or price-effects due to the competition among potential farmer buyers (Margarian 2010). To our knowledge, only Cotteleer, Gardebroek, and Luijt (2008) have acknowledged agent-specific prices due to bargaining and market power. Typically framed within a hedonic pricing framework, these studies focus on average effects and do not consider the search process and the role of asymmetrically distributed information costs. One study has argued that such asymmetries produce different different bargaining positions with respective price-sensitivity (Curtiss et al. 2013). The results by these authors, however, lack external validity since estimation procedures have not been adjusted to acknowledge these asymmetries. Polachek and Yoon (1987) were the first to suggest a two-tier model which separates the observed prices into a hedonic part and three error components (noise, and seller- and buyer-specific price impacts) to account for the relative levels of agents’ search and information costs. While studies of the real estate market have highlighted the role of asymmetric information in price schedules (Kumbhakar and Parmeter 2010), we have not found similar studies of farmlandmarkets. Therefore, in this article we empirically investigate the role of the search process in farmland price formation.
Dryland cropland without irrigation potential and nontilla- ble grazing land reported the next highest rate of decline at about 10 percent across Nebraska. The sharpest rates of decline for dryland cropland without irrigation potential were noted in the Central, Southwest, and South Districts at about 15 percent. These Districts tend to be some of the major winter wheat producing regions of the state and this small grain experienced exceptionally low commodity pric- es during 2016. Suppressed prices for wheat might have led to reverberating effects through the local land markets. The high rates of decline, ranging from 13 to 18 percent, report- ed for the Central, East, and Southwest Districts were for nontillable grazing land or part of the major land base serv- ing the cow-calf industry. Hayland also noted similar rates of decline for the Northwest and Central Districts.
Agricultural commodity markets continued their decline in 2015 and 2016 as producers across Ne- braska faced lower prices for crops and livestock. Lower values have resulted in tighter margins for servicing rent or debt payments. Preliminary find- ings from the University of Nebraska–Lincoln Ne- braska Farm Real Estate Market Survey 2016 indicate that as of February 1, 2016 the weighted average farmland value declined by about 4 percent over the prior 12-month period to $3,135 per acre (Figure 1 and Table 1). This decline marks the second consec- utive year of lower weighted average farmland values in Nebraska.
The topic of real estate bubbles has gained prominence amidst the recent housing market crash and financial crisis. The related issue of bubbles in the rural land market is equally important given that farmland is the most important asset in the farm business and in the farm household investment portfolio. Volatility in farmland values generates potential eco- nomic hardship, especially for communities dependent upon agriculture for economic se- curity (Power and Turvey 2010). Yet the valuation of farmland is not well understood and remains a problematic exercise (Goodwin, Mishra, and OrtaloMagne 2003).
The Korean government adopts the farmland reverse mortgage for the first time in the world, which is called as the Farmland Pension. She has utilized the publicly assessed land value in order to liquidate the farmland equity until now. However, this method is very arguable recently because this assessed value by government is relatively lower than appraisal or transaction values. It means that the monthly payment amount is relatively lower than that by any other farmland value such as the transaction and the monthly appraisal estimation value. This paper uses the monthly dryfield and ricefield data because the pension payment is implemented by the monthly base and to get the more robust estimate values instead of using the quarter or year base data even though the most previous researches used the quarter and year data. It also uses Three Year National Bond as the proxy variable of real interest instead of Company Bond because the transaction of farmland does not occur in real world. The goal of this study tries to figure out the appropriate land value in order to provide the more amount of the monthly payment for the rural elderly who join in the farmland pension system.
The survey also asked if the respondent owned the house (or apartment or mobile home) currently occupied, rented, or occupied the residence without a payment of cash rent. Survey respondents who rent their home are expected to be less likely to support a PACE referenda. Renters may view their residency in Kent County as more temporary than homeowners, and therefore may be less likely to invest in public effort to preserve farmland. Alter- natively, but consistent with the same hypothesis, renters may view themselves as potential buyers of land for a home, and consequently may associate PACE programs with appreciating housing prices. The final section of the survey also gathered in- formation about income. Respondents were provided with a series of income ranges and asked to identify the increment which best described what they thought their total pre-tax family income would be that year. Consistent with demand theory, higher levels of income are hypothesized to increase the probability that a respondent will support a PACE program. This survey section also requested infor- mation about age, gender, number of children, and educational level of the respondents. While these variables were included to control for heterogeneity in preferences, we do not pose hypotheses with regard to their directional influence on survey respondents’ voting decisions.
State level data from 1950 through 1996 is used for this analysis. Determinants of farmland demand include land in agriculture (LANDAG), estimated annually; value of land and buildings (VALLB), the annual dollar value of land and buildings per acre; net farm income (NFIAC), the annual net of cash receipts per acre of farmland; capital gains on value of land and buildings (CAPGAIN), the annual dollar change in farmland value per acre; property taxes paid per acre (TAXES), the annual property taxes paid per acre; farm credit lending rate (INTRATE), the annual farm credit lending rate for farmers; and the three month government treasury bill rate (TBILL). The rate of appreciation (RATAPRX) is computed as the annual rate of return on farmland value. The three-month government Treasury bill rate is used as a proxy for a risk-free return. The sources for the data collected include the New Jersey Agricultural Statistics Service, New Jersey State Econometric Model of Agriculture, United States Federal Reserve Board, and the New Jersey Department of Community Affairs. State level data was selected because it was relatively easy to obtain for all variables considered in the analysis. A table of summary statistics for the data used in the thesis is provided in Table 3.
From a financial economics perspective, it is difficult to ignore either approach when valuing farmland. The sales comparison approach confronts the notion that observed sales transactions are the direct result of what a buyer is willing to pay for a farm and a seller is willing to take as compensation for transferring ownership. As a result, it is hard to argue with market determined sales prices. It can be difficult, however, when casually ob- serving farmland transactions, to know all the infor- mation that impacted and ultimately resulted in a trans- action with an observed price. Appraisers using the sales comparison approach often make numerous ad- justments to the attributes of comparable sales to en- sure that their opinion of value for a subject property is accurate.
In contrast to the 1980s, farmland values dropped more moderately, as government subsidy payments propped up farm incomes. From 1998 to 2002, the U.S. agricultural sector received $18.4 billion annually in government payments, mostly through emergency payments, which ac- counted for 38.2 percent of U.S. net farm income. These subsidy pay- ments were quickly capitalized into farmland values. In 2000, the U.S. Department of Agriculture (USDA) reported that government payments accounted for 30 percent of national farmland values—and in some re- gions up to 70 percent (Ryan and others). By 2004, some analysts esti- mated that 45 percent of the value of Iowa farmland was derived from government payments (Barnard and others; Duffy; Holste). In 2008, with rising crop prices, farmers are expected to receive $11 billion in government subsidy payments, accounting for just 14.5 percent of net farm incomes and a smaller share of farmland values.
A final note: these recent percentage value gains to Nebraska farmland beg the question, “Are they really sustainable?” If one assumes that farm incomes remain at 2011 earnings levels or higher, then one may answer with a guarded yes. However, more likely is an immediate future that is economically volatile for production agriculture – triggered by weather patterns, the strength of the dollar, interest rates, international financial fallouts and political unrest both here and abroad. That said, there is no question that some retreat of these value advances could easily happen in the next few years. Call it a reality reset. And it may be just what is needed as market participants are able to more accurately assess the underlying market fundamentals .
Source: Census of Agriculture. Sample includes all zip codes with at least three operations reporting in every year. Note: Concentration is defined as the weighted median farmland in each zip code (see text for discussion). For each zip code and panel, the percent-change in concentration is calculated as 100 times the change in concentration divided by average concentration in the two years considered. For the long panels (1987-2002), the percentage change is calculated as the sum of percentage changes for the individual panels. Payment quintiles are calculated using payments per acre of farmland in the beginning panel year for all zip codes reporting positive government payments in the beginning year. For the long panels, quintiles are calculated using the sum of payments-per-acre in 1987, 1992, and 1997. Because zip codes are sometimes classified into different payment categories in different panels, the percentage change for the long panel may not equal the sum of the individual panels.
Land use extensification, or even total abandonment, of these agricultural landscapes results from unprofitable management and changing social preferences. Most mountain grasslands are secondary vegetation formations whose continuity demands a certain amount of subsidiary energy through human activities. The economic regression of the 1990s, combined with negative demographic trends — emigration to larger towns and the rupture of peasants' links to their land due to 40 years of collectivised property — has led to land abandonment and secondary succession. Between 1949 and 2003, two-thirds of the grasslands in Poľana BR were overgrown (Gallayová, 2008). This natural process can lead to the loss of specialised species whose existence depends on specific management practices, as in the East Carpathians (Ružičková et al., 2001). Decreases in biodiversity not only mean that the objectives of Natura 2000 are not achieved, but also cause significant loss of cultural landscapes, their scenery and traditional character (Olah and Boltižiar, 2009), especially in such extensively used sub-mountain and mountain cultural landscapes with HNV farmland. Land use intensification — either more intense management (forest monocultures or clearcutting) or urbanisation — also significantly alters or even completely destroys natural assets in protected areas. While forestry intensification affects almost all Slovak mountain BRs, the development of tourism centres and sport infrastructure mainly affects Tatry BR.
Artikeln ”Land marketing and hedonic price model in Turkish markets: Case study of Karacabey district of Bursa province” av Vural och Fidan (2009) syftar på att identifiera variabler som påverkar markens värde. Det görs genom att använda en hedonisk modell som tar hänsyn till korrelationen mellan de förklarande variablerna. Undersökningen är en studie av Karacabey distriktet i Turkiet. Data var hämtad från 54 lantbrukare och variablerna som undersöktes var avstånd till gården, storleken på marken, PH-värdet, kaliumnivå, jordens fuktighet, fosfatnivå, salthalt samt organiskt växtmaterial. Två stycken regressioner gjordes. Den första var en vanlig linjär och fick en förklaringsgrad på 61,3 % med en signifikansnivå på 0,004. Den andra var en logaritmisk regression som fick en förklaringsgrad på 54,2 % med en signifikansnivå på 0,034. De variabler som hade en positiv effekt på markvärdet var avstånd till gården, pH-nivå, jordens fuktighet, kaliumnivå och organiskt växtmaterial. Det var bara en faktor som hade en negativ effekt på värdet av åkermarken och det var
This model is applied to a typical farm in Kentucky. The model assumes that farmers have $50,000 in equity to use to purchase farmland and that banks require a 20 percent down payment. Therefore, farmer equity combined with bank financing gives $250,000 for land purchases. Interest rates are assumed to be 7 percent and loans are amortized over 30 years. This interest rate is a base of two sources of credit: a minimum interest rate of 4 percent through the beginning farmer loan program of the Farm Service Agency and a rate of 9.5 percent through a commercial lender
The most important component supporting the earnings potential of farmland, which to this point has not been discussed, is farm profitability. Rising farm profitability over recent years has supported increasingly higher cash rents. One way to look at this is through the trend in gross farm returns per tillable acre. This data was collected through the Illinois Farm Business Farm Management Associations’ website from various Farm Income and Production Reports, published annually by the association. Data was only available from 1994 through 2015. Older data was not included because changes in record keeping procedures would not have allowed for an apple to apples comparison. Gross returns per tillable acre were used before subtracting any expenses since these are the earnings that support cash rent payments.
The distribution of farmed land among the various types of tenure arrangements remained unchanged in 2012 relative to 2007. This is without the CRP, other conservation, or custom farmed acres. Custom farmed acres increased in 2012 but the acres in CRP and in other conservation programs showed a considerable decrease from 2007 to 2012. In spite of the results for 2012, Table 3.3 does show the trend toward more cash rented land. In 1982, cash rented land and land with a crop share lease each accounted for 21 percent of the land. By 2007, cash rent accounted for 46 percent of the land and crop share leased land was only 13 percent of the land. The distribution of farmland by tenure type did not change from 2007 to 2012. The amount of land that is owner-operated has been steadily declining since 1982, going from 55 percent to just 40 percent in 2007. The 2012 results continued to show the amount of land that is cash rented is greater than the amount of land that is owner operated. Remember that Table 3.3 does not include acres participating in a government program.
Other problems follow from co-ownership of land and the difficulty of unknown owners. In many NMS, land ownership registration was poorly maintained, if at all, and in many areas a process of land consolidation occurred, wiping out old boundaries and relocating natural identification points (such as old roads and small rivers). The loss of information on registration and boundaries resulted in a large number of unknown owners in some transition countries (Dale & Baldwin, 2000). In addition, unsettled land inheritance within families during the socialist regime gave rise to widespread fragmentation in land ownership and a high number of co-owners per plot of land. Fragmentation of land is often cited as a constraint on the functioning of land markets – or on their ability to lead to consolidation of farm land. However, evidence suggests that labour market constraints may be a more fundamental cause of fragmentation, and that a combination of improved off-farm employment, retirement, and rental markets can address the major land consolidation problems (Rozelle and Swinnen, 2004).
In Iowa, operator landlords purchased more than 70 percent of the land they rent out from a non-relative, a relative, or at auction. In contrast, non-operator landlords in Iowa inherited or received as a gift about half of the land they rent out. Furthermore, purchase from a non-relative occurred more frequently than purchase from a relative or at auction. Finally, of all acres rented out, 41.4% were inherited or received as a gift, followed by purchased from a non-relative which accounts for 36.7% of all farmland rented out.