Leveraging Wealth from Farmland Appreciation: Borrowing, Land Ownership, and Farm Expansion

Jeremy Weber and Nigel Key

Land Economics, 2015, vol. 91, issue 2, 344-361

Abstract: We study how increases in wealth from rapid appreciation of farmland influenced farmer decisions to borrow, buy land, and expand. Exploiting periods of high and low appreciation and a panel data model that allows for correlation between prior growth trends and the share of land owned, we find that a dollar increase in paper wealth led younger farmers to increase real-estate-secured borrowing by 48 cents. Land purchases accompanied the increase in borrowing, supporting the view that collateral-based lending may be contributing to the recent runup in farmland prices. We find no effect of land wealth on production or acres harvested.

JEL-codes: Q15 R14 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (18)

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Working Paper: Leveraging Wealth from Farmland Appreciation: Borrowing, Land Ownership, and Farm Expansion (2014)
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