Do Wealth Gains from Land Appreciation Cause Farmers to Expand Acreage or Buy Land?

Recent increases in farm real estate values in the U.S. have increased farm equity in the form of unrealized capital gains. Exploiting periods of high and low appreciation that caused different increases in wealth for farmers owning different shares of their farmland, we examine if U.S. grain farmers expanded their acres harvested or acres owned in response to an increase in their land wealth. We find that land wealth had little effect on farm size. However, for farms of a similar size, owning 10 percentage points more land increased the growth rate of land owned by 2 percentage points. Because older farmers own a larger share of the land in the farm, an increase in the rate of land appreciation slows the rate at which younger farmers acquire land relative to older farmers.


Issue Date:
2013
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/161893
Total Pages:
38
JEL Codes:
Q15; Q12




 Record created 2017-04-01, last modified 2017-08-27

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