Farmland prices have risen dramatically in recent years, which has attracted interest from the broader investment community. At the same time, concern is being expressed regarding another bubble in farmland prices. This paper studies and compares the farmland price to cash rent ratio (P/rent) with the price to earnings (P/E) ratio of stocks. We find that the farmland P/rent ratio has reached historical highs and is currently at the level of the P/E ratio of the S&P 500 during the tech bubble. Data from 1911 to 2012 are used to estimate the beta of farmland, a measure of the risk that farmland adds to a diversified portfolio. The beta is found to be very low over this period. Farmland returns are also regressed against expected and unexpected inflation, and we find that farmland moves relatively close to one-to-one with inflation. We also report 10- and 20-year holding period returns for farmland and find that the relationship between return and the cyclically adjusted P/rent ratio is strongly negative. Moreover, the current cyclically adjusted P/rent ratio is extremely high, indicating a reason for caution when investors are considering farmland purchases.
{"title":"Farmland: Is it Currently Priced as an Attractive Investment?","authors":"T. G. Baker, M. Boehlje, M. Langemeier","doi":"10.1093/ajae/aau037","DOIUrl":"https://doi.org/10.1093/ajae/aau037","url":null,"abstract":"Farmland prices have risen dramatically in recent years, which has attracted interest from the broader investment community. At the same time, concern is being expressed regarding another bubble in farmland prices. This paper studies and compares the farmland price to cash rent ratio (P/rent) with the price to earnings (P/E) ratio of stocks. We find that the farmland P/rent ratio has reached historical highs and is currently at the level of the P/E ratio of the S&P 500 during the tech bubble. Data from 1911 to 2012 are used to estimate the beta of farmland, a measure of the risk that farmland adds to a diversified portfolio. The beta is found to be very low over this period. Farmland returns are also regressed against expected and unexpected inflation, and we find that farmland moves relatively close to one-to-one with inflation. We also report 10- and 20-year holding period returns for farmland and find that the relationship between return and the cyclically adjusted P/rent ratio is strongly negative. Moreover, the current cyclically adjusted P/rent ratio is extremely high, indicating a reason for caution when investors are considering farmland purchases.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122440677","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In many areas throughout the United States, the market value of agricultural land exceeds its use value in agricultural production. This deviation is the result of many factors, including urban influence, recreation, mineral extraction, and other natural amenities. This study examines the drivers of the nonagricultural portion of cropland and pastureland values across the United States using a rich geospatial data framework linked to the USDA’s June Area Survey. The analysis suggests that many natural amenities and urban pressures shape the value of US cropland and pastureland, and that development potential is the largest driver of the nonagricultural component of farmland values.
{"title":"Linking the Price of Agricultural Land to Use Values and Amenities","authors":"A. Borchers, J. Ifft, Todd H. Kuethe","doi":"10.1093/ajae/aau041","DOIUrl":"https://doi.org/10.1093/ajae/aau041","url":null,"abstract":"In many areas throughout the United States, the market value of agricultural land exceeds its use value in agricultural production. This deviation is the result of many factors, including urban influence, recreation, mineral extraction, and other natural amenities. This study examines the drivers of the nonagricultural portion of cropland and pastureland values across the United States using a rich geospatial data framework linked to the USDA’s June Area Survey. The analysis suggests that many natural amenities and urban pressures shape the value of US cropland and pastureland, and that development potential is the largest driver of the nonagricultural component of farmland values.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127924920","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Microfinance Institutions (MFIs) provide financial services to the poor and in many ways resemble both banks and non-profit organizations. Many MFIs target women because more women than men are poor, especially in rural areas. Studies show that women manage money differently from men and have different leadership styles. Thus, in credit unions and financial firms, female and male managers achieve different results. In microfinance, gender diversity on the board of MFIs is beneficial, and loans authorized by female loan officers have lower default rates. Motivated by these findings, we ask whether MFIs with a female Chief Executive Officer (CEO) are more efficient at serving the poor without jeopardizing financial sustainability. We adapt the banking approach to managerial (in)efficiency to account for the outreach and sustainability goals of the MFIs, and evaluate whether MFIs' outreach efficiency differs by the gender of their respective CEOs. We estimate a stochastic frontier cost function using the Battese-Coelli (1995) model and the "true" random effects estimators using panel data from over 250 MFIs. We find that MFIs with female CEOs have significantly higher outreach efficiency than MFIs with male CEOs. Similar results are found with a two-step stochastic frontier approach. Overall, the results suggest that promoting gender diversity at the top levels of MFI management is likely to have both social and financial benefits.
{"title":"Are Women Better Bankers to the Poor? Evidence from Rural Microfinance Institutions","authors":"Valentina Hartarska, Denis Nadolnyak, R. Mersland","doi":"10.1093/ajae/aau061","DOIUrl":"https://doi.org/10.1093/ajae/aau061","url":null,"abstract":"Microfinance Institutions (MFIs) provide financial services to the poor and in many ways resemble both banks and non-profit organizations. Many MFIs target women because more women than men are poor, especially in rural areas. Studies show that women manage money differently from men and have different leadership styles. Thus, in credit unions and financial firms, female and male managers achieve different results. In microfinance, gender diversity on the board of MFIs is beneficial, and loans authorized by female loan officers have lower default rates. Motivated by these findings, we ask whether MFIs with a female Chief Executive Officer (CEO) are more efficient at serving the poor without jeopardizing financial sustainability. We adapt the banking approach to managerial (in)efficiency to account for the outreach and sustainability goals of the MFIs, and evaluate whether MFIs' outreach efficiency differs by the gender of their respective CEOs. We estimate a stochastic frontier cost function using the Battese-Coelli (1995) model and the \"true\" random effects estimators using panel data from over 250 MFIs. We find that MFIs with female CEOs have significantly higher outreach efficiency than MFIs with male CEOs. Similar results are found with a two-step stochastic frontier approach. Overall, the results suggest that promoting gender diversity at the top levels of MFI management is likely to have both social and financial benefits.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-01-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116501999","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We develop a conceptual model to study the impact of mandate policies on stimulating investment in cellulosic biofuel refineries. In a two-period framework, we compare the first-period investment level (FIL) under three scenarios: laissez-faire, non-waivable mandate (NWM) policy, and waivable mandate (WM) policy. Results show that when plant-level marginal costs are increasing then both NWM policy and WM policy may stimulate FIL. The WM policy has a smaller impact than does the NWM policy. When the plant-level marginal costs are constants, however, WM policy does not increase FIL but does increase the expected profit of more efficient investors.
{"title":"Investment in Cellulosic Biofuel Refineries: Do Waivable Biofuel Mandates Matter?","authors":"R. Miao, D. Hennessy, B. Babcock","doi":"10.1093/ajae/aar142","DOIUrl":"https://doi.org/10.1093/ajae/aar142","url":null,"abstract":"We develop a conceptual model to study the impact of mandate policies on stimulating investment in cellulosic biofuel refineries. In a two-period framework, we compare the first-period investment level (FIL) under three scenarios: laissez-faire, non-waivable mandate (NWM) policy, and waivable mandate (WM) policy. Results show that when plant-level marginal costs are increasing then both NWM policy and WM policy may stimulate FIL. The WM policy has a smaller impact than does the NWM policy. When the plant-level marginal costs are constants, however, WM policy does not increase FIL but does increase the expected profit of more efficient investors.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"119374325","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-11-01DOI: 10.1111/j.0002-9092.2004.00658.x
D. Kristófersson, K. Rickertsen
This article is concerned with efficient estimation of characteristics demand. We derive and estimate an inverse input demand system for quality characteristics by using 172,946 observations over 881 trading days in the Icelandic fish auctions. An improved estimation method based on an expanded random coefficient model is suggested as an alternative to the currently used two-stage method of Brown and Rosen. The estimates demonstrate the improved efficiency of the suggested method. A number of empirical results emerge, including a general increase in the demand for quality. Copyright 2004, Oxford University Press.
{"title":"Efficient Estimation of Hedonic Inverse Input Demand Systems","authors":"D. Kristófersson, K. Rickertsen","doi":"10.1111/j.0002-9092.2004.00658.x","DOIUrl":"https://doi.org/10.1111/j.0002-9092.2004.00658.x","url":null,"abstract":"This article is concerned with efficient estimation of characteristics demand. We derive and estimate an inverse input demand system for quality characteristics by using 172,946 observations over 881 trading days in the Icelandic fish auctions. An improved estimation method based on an expanded random coefficient model is suggested as an alternative to the currently used two-stage method of Brown and Rosen. The estimates demonstrate the improved efficiency of the suggested method. A number of empirical results emerge, including a general increase in the demand for quality. Copyright 2004, Oxford University Press.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"136 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121038355","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-11-01DOI: 10.1111/j.0002-9092.2004.00655.x
D. Dong, Brian W. Gould, H. Kaiser
The modeling of micro-level food demand patterns requires not only allowing for household heterogeneity, but also addressing the problem of censoring. In this article, we present a variation of the Amemiya-Tobin framework for estimating a censored demand system that allows for household heterogeneity. The unique aspect of our approach is the use of a procedure that ensures the adding up of both latent and observed expenditure shares and also imposes expenditure share nonnegativity. This system is applied to an analysis of food demand based on a random sample of urban Mexican households.
{"title":"Food Demand in Mexico: An Application of the Amemiya‐Tobin Approach to the Estimation of a Censored Food System","authors":"D. Dong, Brian W. Gould, H. Kaiser","doi":"10.1111/j.0002-9092.2004.00655.x","DOIUrl":"https://doi.org/10.1111/j.0002-9092.2004.00655.x","url":null,"abstract":"The modeling of micro-level food demand patterns requires not only allowing for household heterogeneity, but also addressing the problem of censoring. In this article, we present a variation of the Amemiya-Tobin framework for estimating a censored demand system that allows for household heterogeneity. The unique aspect of our approach is the use of a procedure that ensures the adding up of both latent and observed expenditure shares and also imposes expenditure share nonnegativity. This system is applied to an analysis of food demand based on a random sample of urban Mexican households.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128005552","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-11-01DOI: 10.1111/j.0002-9092.2004.00647.x
S. Swallow, M. Mazzotta
Laws concerning government accountability mandate that agencies weigh constituent interests in setting priorities. This study extends literature on the value of research by considering the public's stated preferences for scientist-effort allocated across an Agricultural Experiment Station's research portfolio. Over 75% of respondents expressed a willingness-to-pay exceeding $20 per household for allocations of at least 139 scientist-months. The mean household is willing to pay about $25 for a 25% increase in effort. Marginal analysis identifies topic areas where an additional scientist-month provides above- or below-average benefits. The distribution of effort across research topics significantly affects respondents' values.
{"title":"Assessing Public Priorities for Experiment Station Research: Contingent Value and Public Preferences for Agricultural Research","authors":"S. Swallow, M. Mazzotta","doi":"10.1111/j.0002-9092.2004.00647.x","DOIUrl":"https://doi.org/10.1111/j.0002-9092.2004.00647.x","url":null,"abstract":"Laws concerning government accountability mandate that agencies weigh constituent interests in setting priorities. This study extends literature on the value of research by considering the public's stated preferences for scientist-effort allocated across an Agricultural Experiment Station's research portfolio. Over 75% of respondents expressed a willingness-to-pay exceeding $20 per household for allocations of at least 139 scientist-months. The mean household is willing to pay about $25 for a 25% increase in effort. Marginal analysis identifies topic areas where an additional scientist-month provides above- or below-average benefits. The distribution of effort across research topics significantly affects respondents' values.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"66 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124704794","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2004-11-01DOI: 10.1111/j.0002-9092.2004.00652.x
G. Karagiannis, P. Midmore, V. Tzouvelekas
This article proposes a tractable approach for analyzing the sources of TFP changes (i.e., technical change, changes in technical and allocative inefficiency, and the scale effect) in a multi-output setting, while retaining the single-equation nature of the econometric procedure used to estimate the parameters of the underlying technology. The proposed approach relies on Bauer's cost function-based decomposition of TFP changes and the duality between input distance and cost functions. The empirical results are based on a sample of 121 UK livestock farms observed over the period 1983–92 and a translog input distance function. Copyright 2004, Oxford University Press.
{"title":"Parametric Decomposition of Output Growth Using a Stochastic Input Distance Function","authors":"G. Karagiannis, P. Midmore, V. Tzouvelekas","doi":"10.1111/j.0002-9092.2004.00652.x","DOIUrl":"https://doi.org/10.1111/j.0002-9092.2004.00652.x","url":null,"abstract":"This article proposes a tractable approach for analyzing the sources of TFP changes (i.e., technical change, changes in technical and allocative inefficiency, and the scale effect) in a multi-output setting, while retaining the single-equation nature of the econometric procedure used to estimate the parameters of the underlying technology. The proposed approach relies on Bauer's cost function-based decomposition of TFP changes and the duality between input distance and cost functions. The empirical results are based on a sample of 121 UK livestock farms observed over the period 1983–92 and a translog input distance function. Copyright 2004, Oxford University Press.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130855159","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
At livestock auctions, the same purchasing agent can represent more than one processor. Repeated multiple-unit English auctions are created in a laboratory to measure the impact of shared agents on trade prices under alternative treatments with six, and as few as two, agents representing six principals. Treatments are constructed in which the agents either know or do not know quantity for sale, and in which there are progressively fewer agents bidding. Knowledge of quantity for sale can be anticompetitive. Evolution toward increased market concentration leads to consistent anticompetitive pricing, resulting in prices significantly lower than the predicted competitive equilibrium prices.
{"title":"Shared Agents and Competition in Laboratory English Auctions","authors":"D. Menkhaus, Owen R. Phillips, Kalyn T. Coatney","doi":"10.1111/1467-8276.00491","DOIUrl":"https://doi.org/10.1111/1467-8276.00491","url":null,"abstract":"At livestock auctions, the same purchasing agent can represent more than one processor. Repeated multiple-unit English auctions are created in a laboratory to measure the impact of shared agents on trade prices under alternative treatments with six, and as few as two, agents representing six principals. Treatments are constructed in which the agents either know or do not know quantity for sale, and in which there are progressively fewer agents bidding. Knowledge of quantity for sale can be anticompetitive. Evolution toward increased market concentration leads to consistent anticompetitive pricing, resulting in prices significantly lower than the predicted competitive equilibrium prices.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"275 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"119380886","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
For risk-averting agents, risks alter production decisions while the existence of institutions to insure against adverse states of nature will likely restore decisions toward levels under risk neutrality. In this article, conditions are identified on a stochastic technology to test H rn 0,≤ : that risk averters choose smaller input levels than risk neutral agents, and H ra 0,≤ : that an increase in risk aversion reduces input use. A robust statistical method to test for dominance is adapted to stochastic production relations. It is found that H rn 0,≤ is likely true for nitrogen application on Iowa corn. Weaker evidence is found in favor of H ra 0,≤ . Copyright 2003, Oxford University Press.
{"title":"Tests for the Role of Risk Aversion on Input Use","authors":"J. Roosen, D. Hennessy","doi":"10.1111/1467-8276.00101","DOIUrl":"https://doi.org/10.1111/1467-8276.00101","url":null,"abstract":"For risk-averting agents, risks alter production decisions while the existence of institutions to insure against adverse states of nature will likely restore decisions toward levels under risk neutrality. In this article, conditions are identified on a stochastic technology to test H rn 0,≤ : that risk averters choose smaller input levels than risk neutral agents, and H ra 0,≤ : that an increase in risk aversion reduces input use. A robust statistical method to test for dominance is adapted to stochastic production relations. It is found that H rn 0,≤ is likely true for nitrogen application on Iowa corn. Weaker evidence is found in favor of H ra 0,≤ . Copyright 2003, Oxford University Press.","PeriodicalId":375525,"journal":{"name":"Wiley-Blackwell: American Journal of Agricultural Economics","volume":"349 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2003-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120550972","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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