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Farmland cash rents and the dollar

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  • Sharmistha Nag
  • Jeffrey J. Reimer

Abstract

We explore whether the U.S. exchange rate could have an influence on cash rental rates for farmland in five U.S. cornbelt states. We find that farmland cash rents have a fairly strong, positive correlation with the U.S. dollar, in terms of its real value relative to major agricultural trading partners. One explanation for the correlation is that a strong dollar lowers the price of key inputs and thus has purchasing power effects. A strong dollar may therefore be associated with higher net returns, and the payment of higher cash rents by farmers. We find support for this hypothesis through a series of econometric models.

Suggested Citation

  • Sharmistha Nag & Jeffrey J. Reimer, 2011. "Farmland cash rents and the dollar," Agricultural Economics, International Association of Agricultural Economists, vol. 42(4), pages 509-517, July.
    • Handle: RePEc:bla:agecon:v:42:y:2011:i:4:p:509-517
    DOI: 10.1111/j.1574-0862.2010.00527.x
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