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Mandatory Production Controls and Asset Values: A Case Study of Burley Tobacco Quotas

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  • Valerie L. Vantreese
  • Michael R. Reed
  • Jerry R. Skees

Abstract

Mandatory production control programs affect asset values. Changes in the implied value of burley tobacco quota and impacts on agricultural land values are estimated using a capitalization approach. Recent instability in the tobacco program has created uncertainty about the future profitability of quota ownership. The procedure uses data on individual parcel transactions and regresses the parcel's price on hedonic factors including the parcel's tobacco quota. Results indicate tobacco quota values have fluctuated as much as 75% between some years. The implication is that mandatory controls affect both the value and risk associated with ownership of the production right.

Suggested Citation

  • Valerie L. Vantreese & Michael R. Reed & Jerry R. Skees, 1989. "Mandatory Production Controls and Asset Values: A Case Study of Burley Tobacco Quotas," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 319-325.
    • Handle: RePEc:oup:ajagec:v:71:y:1989:i:2:p:319-325.
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    File URL: http://hdl.handle.net/10.2307/1241589
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    Cited by:

    1. Richard J Vyn & James Rude, 2020. "The Influence of Supply Management on Farmland Values in Ontario," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(4), pages 815-834, December.
    2. Laure Latruffe & Chantal Le Mouël, 2009. "Capitalization Of Government Support In Agricultural Land Prices: What Do We Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 659-691, September.
    3. Feichtinger, Paul & Salhofer, Klaus, 2011. "The Valuation of Agricultural Land and the Influence of Government Payments," Factor Markets Working Papers 112, Centre for European Policy Studies.

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