Agricultural Finance and Management Section Track Sessions

Crop insurance programs have moved from the periphery to the core of U.S. federal risk support for crop producers. Not only has the program grown in participation, but coverage levels and revenue products have increased. Further the rating system for the program has been the subject of significant research over the past decade. The upshot is that a considerable evolution in rating has occurred. This session will provide an update of current rating procedures and provide an overview of the research that led to the current system. Finally, Tom Worth, Chief Actuary of USDA/RMA will provide an overview of the challenges and future directions for program rating.

Over the past few years, both land values and farmland rental rates have consistently experienced double-digit percentage increases throughout much of the Midwest and Great Plains regions. Reflecting increases in farm revenues and income levels, these increases in land costs have kept pace with or exceeded other production costs such as variable inputs and machinery. A significant amount of work has been done by agricultural economists in an attempt to analyze the determinants of both land values and rental rates, linking them with a range of factors including the land's direct income generating potential via measures of expected crop revenues, expected or actual cash flows from government programs, soil and other productivity factors, urbanization pressures, and a number of other spatial considerations such as proximity to livestock operations or ethanol facilities. Furthermore, researchers have used a number of methods (i.e. standard OLS, various spatial models and specifications) and data sources (i.e. farm management association, USDA ARMS survey, Census of Ag, regional land transactions) to study these issues. This track session will focus on recent research efforts on land value and rental markets through three papers. The first will provide an overview of trends in land values and previous work done in this area, while providing an analysis of the risks currently underlying farmland values and contrasting them with previous experiences such as in the 1980s. The second paper will shift focus towards rental markets, providing a summary of trends in rental rates, the types of rental agreements currently being used in practice, and an overview of the characteristics of farmland tenure. The final paper will outline some of the new data sources and tools available through USDA sources for land value and rental agreement research. Specifically, new surveys have recently been implemented that should be of particular interest to researchers working in this area.