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Farmland Prices and the Real Interest Rate on Farm Loans

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  • Gertel, Karl

Abstract

While economists agree on the importance of returns to land as a determinant of farmland prices, they disagree about the role of interest rates and inflation. Analysis of farmland prices for the conterminous United States, the Corn Belt, and wheat-growing areas of Kansas showed that the real interest rate on farm mortgages has only a minimal temporary effect on farmland prices before 1972. The real interest rate along with returns have become major determinants of farmland prices since then. Changes in the inflation rate will affect real farmland prices if nominal interest rates fail to keep up with inflation.

Suggested Citation

  • Gertel, Karl, 1990. "Farmland Prices and the Real Interest Rate on Farm Loans," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 42(1), pages 1-8.
    • Handle: RePEc:ags:uersja:138844
    DOI: 10.22004/ag.econ.138844
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    References listed on IDEAS

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    1. Just, Richard E. & Miranowski, John A., 1988. "US Land Prices: Trends and Determinants," 1988 Conference, August 24-31, 1988, Buenos Aires, Argentina 183169, International Association of Agricultural Economists.
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    Cited by:

    1. Gertel, Karl & Atkinson, Linda, 1993. "Structural Models and Automated Alternatives for Forecasting Farmland Prices," Technical Bulletins 156756, United States Department of Agriculture, Economic Research Service.
    2. Jean Cavailhès & Alban Richard & Nathalie Taverdet, 1996. "Des rentes classiques aux options de rentes. Une analyse de l'évolution du prix des terres en France," Revue Économique, Programme National Persée, vol. 47(4), pages 963-981.

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      Keywords

      Land Economics/Use;

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