A model for the valuation of farmland in Spain

Abstract

The main task when valuing land is to identify the variables affecting its value. This is critical when a large number of variables is involved. Furthermore, collinearity and other econometric disturbances frequently occur in this type of research. Against this background, and in an effort to surmount these difficulties, this paper proposes and then tests some statistical techniques based on multivariate analysis. Multiple correspondence analysis helps to ensure rigour, simplicity and accuracy in the process of identifying the variables involved in the valuation of farmland. Finally, once the relevant variables have been identified, a model for the valuation of farmland plots is then specified.

Land Pricing Model: Price Re-evaluation Due to the Erosion and Climate Change Effects

“…These findings are confirmed by recent studies, where the results lead to a similar conclusion, revealing that the agricultural land prices are only partially explained by agricultural yields (production function), and other non-production factors also enter the land price (Borchers, Ifft, and Kuethe, 2014). For these reasons, Garcia and Grande (2003) suggest the use of statistical techniques and methods based on multidimensional analysis to value agricultural land, which refines and simplifies the identification of variables involved in the valuation of agricultural land.…”

The Value of Farmland and Its Determinants—The Current State of the Art

“…The main task when valuating land is to identify the variables, which affect its value [20]. So far, some variables which are present and common in the literature are identified alongside their sources.…”

“…Furthermore, at the time of the study in [20], the valuation of farmland was regaining interest because of tax adjustments, the purchase of land for public building and social purposes, and because it is necessary when the owners wish to claim EU grants. This last factor becomes even more pertinent today, as the EU's financial stimulus in reaction to the COVID-19 pandemic and subsequent crisis is the biggest ever in Europe [21].…”

Agricultural land valuation methods used by financiers: The case of South Africa

“…Furthermore, Coetzee and Steyn (2004) discussed an approach to calculate the productive value of farmland in South Africa, while Kleynhans and Lombard (1994) evaluated the valuation methods used for the possible implementation of agricultural land tax in South Africa. The international research studies include an econometric valuation model developed by Garcia and Grande (2003) for farmland in Spain. Furthermore, research conducted by Cabrido (1990) provided an overview of the various methods of land valuation and more specifically the methods utilised by the Philippine government during its agrarian reform programme.…”

“…Although alternative financing models have been developed, using both the expected harvest and crop insurance as collateral, the use of agricultural land as collateral in providing financing to producers is still the primary and cheaper form of financing (Middelberg, 2013;Anseeuw & Ducastel, 2012). However, to place a value on the collateral, the agricultural financier has to value the agricultural land and this valuation process is intricate and complex (Wessels & Willemse, 2013;Garcia & Grande, 2003;Cabrido, 1990). Furthermore, in terms of the Property Valuers Profession Act (Act No.…”