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Returns To Cash Rented Farmland And Stocks: A Social Perspective

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  • Gertel, Karl

Abstract

For the period 1940 to 1982, the internal rate of return for cash-rented farmland (adjusted for inflation) exceeded the return to common stocks by 1.3 percent. Given prospects for greater mobility of investment funds between the farm and nonfarm sectors, future returns to cash rented farmland should more closely match returns to common stocks. However, consistent with past relationships, a greater proportion of the total returns to farmland is likely to come from increases in asset value, and a smaller proportion from current income, relative to common stocks. These historical and prospective relationships are interpreted in light of concerns the'U.S. farmland is "underpriced" relative to other less durable assets in international markets. The extent and significance of such underpricing depends on the ability of the U.S. economy to maintain an adequate level of national investment.

Suggested Citation

  • Gertel, Karl, 1982. "Returns To Cash Rented Farmland And Stocks: A Social Perspective," Staff Reports 276751, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerssr:276751
    DOI: 10.22004/ag.econ.276751
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    Citations

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    Cited by:

    1. Hrubovcak, James M. & Durst, Ron L., 1986. "The Impact Of Tax Reform On Implicit Rental Rates For Farm Capital," 1986 Annual Meeting, July 27-30, Reno, Nevada 278497, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Hrubovcak, James & LeBlanc, Michael, 1985. "Tax Policy and Agricultural Investment," Technical Bulletins 157673, United States Department of Agriculture, Economic Research Service.
    3. LeBlanc, Michael & Yanagida, John F. & Conway, Roger K., 1985. "The Derived Demand For Real Cash Balances In Agricultural Production," Staff Reports 277838, United States Department of Agriculture, Economic Research Service.
    4. Hrubovcak, James & Durst, Ron, 1987. "The Tax Reform Act of 1986: Implications for the Cost of Capital in Agriculture," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 269949, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Gertel, Karl, 1985. "Differing Effects of Farm Commodity Programs on Land Returns and Land Values," Agricultural Economic Reports 307999, United States Department of Agriculture, Economic Research Service.

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    Keywords

    Agricultural Finance; Land Economics/Use;

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