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The Impacts of Business Cycles on Returns to Farmland Investments

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  • Bruce Bjornson

Abstract

Expected performance and valuation of investments in farmland are examined in relation to prevailing business cycle conditions over a period that includes both the 1970s farm boom and 1980s farm recession. Information on risk premia in debt, equity, and land markets are shown to significantly affect conditional expected returns to farmland and, consequently, farmland values. Further, conditional expected land returns diverge significantly in some years from returns conditionally required on the basis of systematic risk. Overall implications are that expected land returns are dependent not only on local sector conditions but also on time-varying macroeconomic conditions related to business cycles.

Suggested Citation

  • Bruce Bjornson, 1995. "The Impacts of Business Cycles on Returns to Farmland Investments," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 566-577.
    • Handle: RePEc:oup:ajagec:v:77:y:1995:i:3:p:566-577.
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    File URL: http://hdl.handle.net/10.2307/1243225
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    Cited by:

    1. Unknown, 1998. "Commodity Costs and Returns Estimation Handbook (entire book-condensed file)," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    2. Jill M. Phillips & Ani L. Katchova, 2004. "Credit score migration analysis of farm businesses: conditioning on business cycles and migration trends," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 64(1), pages 1-15, May.
    3. Songjiao Chen & William W. Wilson & Ryan Larsen & Bruce Dahl, 2015. "Investing in Agriculture as an Asset Class," Agribusiness, John Wiley & Sons, Ltd., vol. 31(3), pages 353-371, June.
    4. Unknown, 1998. "References/Literature Cited," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    5. Katchova, Ani L. & Nam, Sangjeong, 2005. "Credit Risk Migration Analysis Focused on Farm Business Characteristics and Business Cycles," 2005 Annual meeting, July 24-27, Providence, RI 19451, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Feng, Xiaoguang, 2017. "Three essays on agricultural insurance and farm real estate investment," ISU General Staff Papers 201701010800007133, Iowa State University, Department of Economics.

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