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Document Type

Thesis - University Access Only

Award Date

2014

Degree Name

Master of Science (MS)

Department

Economics

First Advisor

Larry Janssen

Abstract

Values of agricultural lands in South Dakota have been steadily increasing. Even during the recent economic recession, values of agricultural lands continued to increase. The main objectives of this project were to obtain insights regarding cause(s) of increase in land-values, and to see whether there was any influence of increasing revenue of corn on land values. In addition, this research also investigated if there was any effect of interest rates on rent-to-value ratio. A major portion of the dataset included in this study was obtained from South Dakota Agricultural Statistics Service (SDASS). This dataset includes information regarding per acre land-values and cash-rental rates. The main variables analyzed to estimate market values of agricultural lands were per acre revenue associated to land, corn revenue as a percentage of total revenue, interest rates and population pressure. Key findings from this research include that the main variables that influence cropland values are interest rates, corn revenue percentage measure, rental rates and population density. Among these variables, cropland values respond the most to interest rates and to corn revenue as a percentage of total revenue. However, there are some regional differences based on the fact that cropland values respond differently to these variables. The eastern regions, particularly the East Central, Central, North East and regions have independent variables that are statistically significant and influence cropland values the most. The North Central, North West, South Central and South West regions do not seem to have particularly different trend patterns compared to the Central Region. Rent-to-value ratio was influenced by interest rates. As interest rates increase, values of cropland decrease. As a result, rent-to-value ratio would rise. From a regional perspective, rent-to-value ratios increase faster in the North Central, North East and North West regions compared to the Central Region. This research is expected to furnish useful information on cash value and rental rate trends of farmlands in South Dakota, which would be insightful and interesting to scholars as well as stakeholders who are interested in land-value issues. Results from this research can also be useful to decision-makers, farm operators, and other stakeholders who are involved in land-management and agricultural production in the Northern Great Plains.

Library of Congress Subject Headings

Farms -- Valuation -- South Dakota
Land value taxation -- South Dakota
Cash value

Description

Includes bibliographical references (pages 79-81)

Format

application/pdf

Number of Pages

90

Publisher

South Dakota State University

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