Returns, Interest Rates, and Cropland Prices in Selected Regions

摘要

How returns to land and real interest rates on farm mortgages affect farmland prices was examined in the Corn Belt, selected winter wheat-growing areas of Kansas, and soybean- and cotton-growing areas of the Mississippi Delta. Since 1972, returns to land and real interest rates were about equally important in determining farmland prices. The effect of interest rates on land prices in the Corn Belt prior to 1981 was unclear, but a strong negative relationship cannot be ruled out. Rising inflation will raise real farmland prices, and falling inflation will lower them if nominal interest rates do not fully adjust to changes in the inflation rate.