Mandatory Production Controls and Asset Values: A Case Study of Burley Tobacco Quotas

Valerie L. Vantreese, Michael Reed and Jerry R. Skees

American Journal of Agricultural Economics, 1989, vol. 71, issue 2, 319-325

Abstract: Mandatory production control programs affect asset values. Changes in the implied value of burley tobacco quota and impacts on agricultural land values are estimated using a capitalization approach. Recent instability in the tobacco program has created uncertainty about the future profitability of quota ownership. The procedure uses data on individual parcel transactions and regresses the parcel's price on hedonic factors including the parcel's tobacco quota. Results indicate tobacco quota values have fluctuated as much as 75% between some years. The implication is that mandatory controls affect both the value and risk associated with ownership of the production right.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:71:y:1989:i:2:p:319-325.

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