2016 Winter - Understanding the value of agricultural land

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Farm Policy Journal: Vol 13 No 2 2016 Winter - Full Journal - Understanding the value of agricultural land

Australian Farm Institute (2016), Understanding the value of agricultural land, Farm Policy Journal: Vol 13 Number 2 - Winter 2016, Surry Hills, Australia
ISSN 1449–2210 (Print)
ISSN 1449–8812 (Web)

$60.50


FPJ1302B - Lane, T (2016), The Valuation of Agricultural Assets in Australia

FPJ1302B - Lane, T (2016), The Valuation of Agricultural Assets in Australia, in Farm Policy Journal, vol. 13, no. 2, Winter 2016, pp. 1-11, Surry Hills, Australia.

The valuation of agricultural assets in Australia underpins the agricultural land market for purchasers, sellers (vendors), neighbouring farmers, and the banking and investment sectors. The rigour and accuracy of the valuation process is imperative for all these users. There are a myriad of methods and approaches used to value agricultural land. This paper documents those and the other influences including historical sales that can affect the valuation process. Valuers often only have limited access to vital information like farm performance data, seasonal conditions, commodity price fluctuations, buyer motivation, and locational advantages or disadvantages. As a consequence, a valuer can find it quite challenging to apply a capitalisation rate for investors, and give them indicators of potential investment returns that are utilised commonly in the corporate investment world. This is exacerbated due to the need to recognise that successful investment in agricultural land requires patient capital, and that annual operating returns are heavily reliant on the capacity and capability of the individual farm manager.

 

$12.10


FPJ1302C - Henry, M (2016), The Effects of Financialisation on Farmland Demand

FPJ1302C - Henry, M (2016), The Effects of Financialisation on Farmland Demand, in Farm Policy Journal, vol. 13, no. 2, Winter 2016, pp. 13-22, Surry Hills, Australia.

The popularity of farmland is on the rise with new investors that have little or no prior connection to agriculture. Investing in farmland is viewed as a way of capitalising on the concern over food supply in the face of population growth, dietary change of the Asian middle class and apparent land scarcity. Its reputation as a long-term defensive asset which holds its value in periods of low returns adds to its appeal. A growing farm investment management organisation (FIMO) industry has emerged to acquire and manage farmland on behalf of external investors. There are already signs that the influx of new money into agriculture is adding additional volatility and demand in Australian farmland markets. This paper discusses the motives and behaviour of new participants in the farmland market and the potential consequences for land values.

 

$12.10


FPJ1302D - Moss, C (2016), Explaining Changes in Farmland Prices: Another Grail Quest

FPJ1302D - Moss, C (2016), Explaining Changes in Farmland Prices: Another Grail Quest, in Farm Policy Journal, vol. 13, no. 2, Winter 2016, pp. 25-33, Surry Hills, Australia.

The pricing of farmland has been an important aspect in the field of agricultural economics almost from the inception of the discipline. This paper explains how a variety of factors affect farmland values including financial market fundamentals, government policy, macroeconomic factors, and urban pressure. Unfortunately, the explanatory power of our models tends to be low. Consequently, this paper concludes with suggestions to overcome this, including the analysis of the micro-market factors affecting farmland values.

 

$12.10


FPJ1302E - Eves, C (2016), The Analysis of NSW Rural Property Investment Returns: 1990–2014

FPJ1302E - Eves, C (2016), The Analysis of NSW Rural Property Investment Returns: 1990–2014, in Farm Policy Journal, vol. 13, no. 2, Winter 2016, pp. 35-44, Surry Hills, Australia.

Increasing populations and demand for urban development land is also placing greater pressure on food production. These population pressures are now being reflected in the need for increased agricultural food production from a declining rural land base. This increasing demand for rural land is also being evidenced by the additional interest shown by corporations and investment institutions in owning high quality rural land across a range of countries.
Australian rural producers have been well recognised for the efficient production of high quality rural commodities. These attributes are now being reflected in the price being paid for quality rural land in Australia.
This paper analyses all rural land sale transactions across New South Wales (NSW) for the period 1990 to 2014 to determine the investment performance across a range of NSW regional locations and rural land use classifications.
Over this period there have been considerable differences in the average annual capital and total returns for rural land, based on location of the land, the main rural land uses, and the level of management ability of the farm operator.
The established mixed farming and irrigation areas of the state have shown the most consistent average annual returns across the study period, with the pastoral areas of the state having the highest capital growth over the past three years. This paper provides a comprehensive overview of average rural land for the period 1990–2014.

 

$12.10


FPJ1302F - Zhang, W & Beek, Z (2016), Trends and Determinants of US Farmland Values Since 1910: Evidence from the Iowa Land Value Survey

FPJ1302F - Zhang, W & Beek, Z (2016), Trends and Determinants of US Farmland Values Since 1910:  Evidence from the Iowa Land Value Survey, in Farm Policy Journal, vol. 13, no. 2, Winter 2016, pp. 47-55, Surry Hills, Australia.

Valued at 2.31 trillion United States (US) dollars in 2016, farm real estate (land and structures) accounted for 85% of total US farm assets; in addition, farm real estate also represents the largest single item in a typical farmer’s investment portfolio. As a result, changes in its values have been of perennial interest to policy-makers, farmers, researchers and investors alike. Focusing on Iowa, a Midwestern state at the heart of the Corn Belt, and using annual data since 1950 from the Iowa Land Value Survey, this article analyses what drives the changes in land values in Iowa and across the Midwest over time from 1910 to 2016, assesses the return and profitability of farmland as an alternative investment, and also compares the current downturn in US farmland values with the 1920s and 1980s farm crises.
There have been three major ‘golden’ eras in US modern agriculture over the last 100 years: 1910 to 1920, 1973 to 1981, and the most recently from 2003 to 2013. The first two ended in a farm crisis, and many worry a third one is in the making. While declining farm income and land values are alarming, this article argues that it is very unlikely that we will see a replay of 1980s farm crisis or a sudden collapse of the US farm sector. The significant farm income accumulation during 2003–13, the stronger government safety net, and historically low interest rates should help agricultural producers withstand the downturn pressures.
This article also compares the relative return of investment in Iowa farmland and the S&P 500 by taking both the income generation and capital gains of these two assets into consideration. The results show that the investment timing and holding period are key in determining the relative return of the investment.

 

$12.10


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