The effect of agricultural policy on farmland values

摘要

The extent to which agricultural support programmes have been capitalized into farmland prices is examined. A present value land price model was developed which decomposes returns to the land base into its two possible sources (farm production and government subsidies) and allows the discount rates associated with these two income sources to vary. The empirical results indicate that government payments are discounted less than market-based returns in Ontario. Thus, government payments have been viewed as a more stable source of income to Ontario farm operators during the last half century than market-based returns.