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Estimating and Forecasting Imputations in U.S. Agriculture’s Valued Added Accounts: The Case of Rent

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  • Covey, Theodore
  • Morehart, Mitchell J.

Abstract

Explicit rental income is a market-determined measure of the income farmers pay for the rental services they receive as tenants living in dwellings owned by others. Imputed rental income measures the income farmers “pay” for the rental services they receive as tenants living in dwellings which the farm operation owns. It is “imputed” in that its value is not directly observable in the marketplace. Including imputed rental income when accounting for the farm sector’s value added increases the value of agricultural sector production and net farm income. The share of the value of agricultural sector production contributed by gross imputed rental value income is inversely related to the size of the farm operation. Both the income returns to farm business assets (ROA) and income returns to farm equity (ROE) are larger when omitting imputed rental income. However, including net imputed rental income stabilizes net farm income over time. Given that imputed rental income is a measure of economic activity rather than returns to farm business investment, the USDA does not include imputed rental income in its calculation of farm sector ROA and ROE.

Suggested Citation

  • Covey, Theodore & Morehart, Mitchell J., 2005. "Estimating and Forecasting Imputations in U.S. Agriculture’s Valued Added Accounts: The Case of Rent," 2005 Agricultural and Rural Finance Markets in Transition, October 3-4, 2005, Minneapolis, Minnesota 132746, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    • Handle: RePEc:ags:nc2005:132746
    DOI: 10.22004/ag.econ.132746
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    References listed on IDEAS

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    1. Bruce L. Gardner, 1992. "How the Data We Make Can Unmake Us: Annals of Factology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(5), pages 1066-1075.
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    Keywords

    Agricultural Finance; Land Economics/Use;

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