Farmland cash rents and the dollar

Sharmistha Nag and Jeffrey Reimer

Agricultural Economics, 2011, vol. 42, issue 4, 509-517

Abstract: We explore whether the U.S. exchange rate could have an influence on cash rental rates for farmland in five U.S. cornbelt states. We find that farmland cash rents have a fairly strong, positive correlation with the U.S. dollar, in terms of its real value relative to major agricultural trading partners. One explanation for the correlation is that a strong dollar lowers the price of key inputs and thus has purchasing power effects. A strong dollar may therefore be associated with higher net returns, and the payment of higher cash rents by farmers. We find support for this hypothesis through a series of econometric models.

Date: 2011
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