An information approach to the dynamics in farm income: implications for farmland markets

The valuation of farmland is a perennial issue for agricultural policy, given its importance in the farm investment portfolio. Despite the significance of farmland values to farmer wealth, prediction remains a difficult task. This study develops a dynamic information measure to examine the informational content of farmland values and farm income in explaining the distribution of farmland values over time.

Farm income, population and farmland prices: a relative information approach

This paper uses an entropy-based information approach to determine if farmland values are more closely associated with urban pressure or farm income. The basic question is: how much information on changes in farm real estate values is contained in changes in population versus changes in returns to production agriculture? Results suggest population is informative, but changes in farmland values are more strongly associated with changes in the distribution of returns. However, this relationship is not true for every region nor does it hold over time, as for some regions and time periods changes in population are more informative. Results have policy implications for both equity and efficiency.

The role of institutional rural property in diversified investment portfolios in NSW, Australia

The food and fuel crisis experienced in 2006 to 2008 has highlighted the importance of agricultural commodity production throughout developing and developed economies and has placed greater awareness and importance on rural property and rural property markets. These factors have led to an increased interest from major property investment institutions and property companies in the role of rural property in a mixed asset or mixed property investment portfolio. This paper will analyse rural property sales in New South Wales for the period 1990-2008, and will compare total return performance across a number of rural property sectors based on geographic location and land use type. These results show that the inclusion of rural property in an investment portfolio has benefits in relation to return and risk.

A comparison of farmland returns in Australia, Canada, New Zealand and United States

Rural land is still a major property asset class and rural commodity production is an important domestic and export market in all economies. This paper carries out a comprehensive analysis of both rural production and land prices in four major rural production countries. The study compares rural property values in Unites States, Canada, Australia and New Zealand over a period 1990 to 2005 and analyzes and compares the capital return and total return performance for rural land in these four countries. The analysis allows a comparison of farm land returns for both a subsidised and non-subsidised farming policy to determine if levels of farm support result in variations in farm profitability and therefore farm land values.

Factors affecting farmland prices in Finland

The purpose of the study was to analyse factors affecting the differences in land prices between regions. The key issue was to find out the policy effects on farmland prices. In addition to comprehensive literature review, a theoretical analysis as well as modern panel and spatial econometric techniques were utilized. The study clearly pointed out the importance of taking into account the possible spatial dependence. The data were exceptionally large, comprising more than 6 000 observations. Thus, it allowed a thorough econometric estimation including the possibility to take into account the spatial nature of the data. This study supports the view that there are many other factors that affect farmland prices besides pure agricultural returns. It was also found that the support clearly affects land prices. However, rather than assuming the discount rates for support and market returns to be similar, the rough analysis refers to the discount rate for support being a little lower. If this were true it would indicate that farmers rely more on support income than market returns. The results support the view presented in literature that land values are more responsive to government payments when these payments are perceived to be permanent. An important result of this study is that the structural differences between regions and the structural change in agriculture seemed to have a considerable role in affecting land prices. Firstly, the present structure affects the competition in the land market: the more dense farms are in the region the more there are potential buyers, and the land price increases. Secondly, the change in farm structure (especially in animal husbandry) connected to the policy changes that increase area-based support affects land prices. The effect comes from two sources. Growing farms need more land for the manure, and the proportion of retiring farmers may be lower. The introduction of the manure density variable proved to be an efficient way to aggregate the otherwise very difficult task of taking into account the environmental pressure caused by structural change in animal husbandry. Finally, infrastructure also has a very important role in determining the price level of agricultural land. If other industries are prospering in the surrounding area, agricultural viability also seems to improve. The non-farm opportunities offered to farm families make continuing and developing farming more tempting.

Nebraska Farmland Markets Plateau

After several years of successively rising land values and cash rents, Nebraska’s farmland markets 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.

Landscape connectivity, habitat structure and activity of bat guilds in farmland-dominated matrices

Agricultural intensification has caused a decline in structural elements in European farmland, where natural habitats are increasingly fragmented. The loss of habitat structures has a detrimental effect on biodiversity and affects bat species that depend on vegetation structures for foraging and commuting. We investigated the impact of connectivity and configuration of structural landscape elements on flight activity, species richness and diversity of insectivorous bats and distinguished three bat guilds according to species-specific bioacoustic characteristics. We tested whether bats with shorter-range echolocation were more sensitive to habitat fragmentation than bats with longer-range echolocation. We expected to find different connectivity thresholds for the three guilds and hypothesized that bats prefer linear over patchy landscape elements. Bat activity was quantified using repeated acoustic monitoring in 225 locations at 15 study plots distributed across the Swiss Central Plateau, where connectivity and the shape of landscape elements were determined by spatial analysis (GIS). Spectrograms of bat calls were assigned to species with the software batit by means of image recognition and statistical classification algorithms. Bat activity was significantly higher around landscape elements compared to open control areas. Short- and long-range echolocating bats were more active in well-connected landscapes, but optimal connectivity levels differed between the guilds. Species richness increased significantly with connectivity, while species diversity did not (Shannon's diversity index). Total bat activity was unaffected by the shape of landscape elements. Synthesis and applications. This study highlights the importance of connectivity in farmland landscapes for bats, with shorter-range echolocating bats being particularly sensitive to habitat fragmentation. More structurally diverse landscape elements are likely to reduce population declines of bats and could improve conditions for other declining species, including birds. Activity was highest around optimal values of connectivity, which must be evaluated for the different guilds and spatially targeted for a region's habitat configuration. In a multi-species approach, we recommend the reintroduction of structural elements to increase habitat heterogeneity should become part of agri-environment schemes.

The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices. Factor Markets Working Document No. 53, June 2013

After reviewing the Present Value Model (PVM), in its basic form and with its major extensions, the authors carried out a literature review on the instrumental uses of farm land prices; namely what land prices may reveal in the framework of the PVM. Urban influence, non-market goods and climate change are topics where the PVM used with applied data may reveal farmers’ or landowners’ beliefs or subjective values, which are discussed in this paper. There is also extensive discussion of the topic of public regulations, and how they may affect land price directly, or through its present value.