Loss Aversion in Farmland Price Expectations

Kuethe, Todd; Brewer, Brady; Fiechter, Chad

doi:10.3368/le.98.1.102020-0158r

Cited by 2 publications

(3 citation statements)

References 27 publications

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“…Scheinkman and Xiong (2003) present a model of overconfidence and speculative bubbles in the market for a finite asset with no possibility of short sales; in this setting, buyers bid their reservation value and the good is obtained by the most optimistic buyer. More recent work by Kuethe and Oppedahl (2021) and Kuethe et al (2022) finds that bankers and farmland experts are overly cautious when predicting future farmland price increases.…”

Section: Farmland Booms and Bustsmentioning

confidence: 99%

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A survey of literature examining farmland prices: A Canadian focus

Deaton

Lawley

2022

Canadian J Agri Economics

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This study assesses agricultural economics literature on farmland prices and key determinants of these prices. The first section of the paper uses a basic capitalization model to organize a review of the literature and data. We then provide a focused assessment of five streams of literature examining farmland prices: (1) boom‐bust; (2) the capitalization effect of government agricultural subsidies on farmland prices; (3) agricultural zoning; (4) climate change; and (5) prohibitions against non‐local buyers of farmland. Our review highlights challenges to ongoing efforts to model changing farmland prices, the modern emphasis on econometric identification, important variation in the magnitude of estimated relationships across the literature, and the opportunity to expand research in Canada.

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Section: Farmland Booms and Bustsmentioning

confidence: 99%

“…More recent work by Kuethe and Oppedahl (2021) and Kuethe et al. (2022) finds that bankers and farmland experts are overly cautious when predicting future farmland price increases.…”

Section: Farmland Booms and Bustsmentioning

confidence: 99%

A survey of literature examining farmland prices: A Canadian focus

Deaton

Lawley

2022

Canadian J Agri Economics

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“…There is no doubt that "farmland price expectations play a critical role in farm investment decisions, yet previous studies suggest that market experts' expectations are not rational. That is, market experts do not make efficient use of all available information" [27]. Humpesch et al [28] investigate the conjecture that existing land lease contracts influence buyers' and sellers' costs of being information deficient and, thus, their bargaining position, their expectation formation about future returns, and thus ultimately, the farmland price is too.…”

Section: Introductionmentioning

confidence: 99%

Market Price and Supply of Farmland as a Means of Supporting the Wider Development of Sustainable Agricultural Production in Czechia (a Case Study)

Mach,

Dauhiniova,

Kopecká

et al. 2023

Agronomy

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The goal of this article is to predict the further development of the market price of farmland in Czechia. As part of this goal, the environmental and socio-economic factors affecting the quantity and quality of farmland and, subsequently, the amount of its market price will be discussed. In addition to the quality of the farmland, the market price of individual plots of land is influenced by a number of other factors, such as the size and shape of the plot, location, erosion risk, the concluded usufructuary lease agreements, competition from buyers in the vicinity, and other factors. The average market price of farmland in Czechia was 29.4 CZK/m2 in 2021, which represents an increase of 16.1% against the amount of 25.3 CZK/m2 in 2020. According to the results of the statistical analysis, it is possible to assume a constant increase in the prices of farmland precisely because of the ever-decreasing area of land intended for agricultural production. Another factor for the increase in prices can be increased inflation. In 2027, market prices for farmland could reach up to 40 CZK per m2. Nevertheless, Czechia is among the countries with the lowest market price of farmland; the price is even lower than in neighboring Poland or Spain. This also contributes to the fact that the market prices of farmland in Czechia are increasing at a relatively fast pace every year.

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Loss Aversion in Farmland Price Expectations

Cited by 2 publications

References 27 publications

A survey of literature examining farmland prices: A Canadian focus

A survey of literature examining farmland prices: A Canadian focus

Market Price and Supply of Farmland as a Means of Supporting the Wider Development of Sustainable Agricultural Production in Czechia (a Case Study)

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