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Comparison of alternative sources of farmland values

Author

Listed:
  • Christopher Zakrzewicz
  • B. Wade Brorsen
  • Brian C. Briggeman

Abstract

Purpose - Consistent and reliable data on farmland values is critical to assessing the overall financial health of agricultural producers. However, little is known about the idiosyncrasies and similarities of standard land value data sources – US Department of Agriculture (USDA), Federal Reserve Bank land value surveys, and transaction prices. The purpose of this paper is to determine the differences and similarities of land value movements from three land value data sources. Design/methodology/approach - In addition to Oklahoma transaction prices, two survey sources are considered: the USDA annual report and the quarterly Tenth District Survey of Agricultural Credit Conditions administered by the Federal Reserve Bank of Kansas City. The paper describes each data set and identifies differences in data sampling, collection, and reporting. Average values of Oklahoma farmland across data sources are examined. USDA estimates are regressed against quarterly Federal Reserve values across multiple states to determine the point in time represented by USDA estimates. Granger causality tests determine if Federal Reserve land value estimates anticipate movements in USDA land value estimates. Findings - It is found that all three data sources are highly correlated, but transaction prices tend to be higher, especially for irrigated cropland and ranchland. USDA land values are reported as representing land values on January first, but instead they more closely represent first and second quarter land values according to a multi‐state comparison to changes in quarterly Federal Reserve land values. Given the finding that first quarter Federal Reserve Bank land values lead USDA land values and that they are published before the USDA release, Federal Reserve land values are a timely indicator of agricultural producers' financial position. Originality/value - No previous research has addressed the topic of how various sources of agricultural land values compare.

Suggested Citation

  • Christopher Zakrzewicz & B. Wade Brorsen & Brian C. Briggeman, 2012. "Comparison of alternative sources of farmland values," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 68-86, May.
    • Handle: RePEc:eme:afrpps:v:72:y:2012:i:1:p:68-86
    DOI: 10.1108/00021461211222132
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    Cited by:

    1. Ifft, Jennifer & Bigelow, Daniel P. & Savage, Jeffrey, 2018. "The Impact of Irrigation Restrictions on Cropland Values in Nebraska," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(2), May.
    2. Ifft, Jennifer & Wu, Shang & Kuethe, Todd, 2014. "The Impact of Pasture Insurance on Farmland Values," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(3), pages 1-16, December.
    3. Schurle, Bryan & Featherstone, Allen & Wilson, Christine & Crossan, Dylan, 2013. "Land Prices During Periods of Rapid Change," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2013, pages 1-13, June.
    4. Williams, John & McSweeney, Peter & Salmon, Robert, 2014. "Australian Farm Investment: Domestic and Overseas Issues," Papers 234408, University of Melbourne, Melbourne School of Land and Environment.

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