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Relatively high recent returns to farmland investments have led to substantially elevated interest in farmland investments. Absent, however, is a well‐functioning equity market in farmland real estate, or well‐developed indexes of farmland returns that might contribute to the development of tradable shares tied to farmland returns, or to methods to hedge the value of owned agricultural assets. The purpose of this study is to empirically present relevant measures related to farmland returns and other financial assets to provide a broad context for evaluation of farmland investments in a portfolio context. Issues related to the development of a farmland fund and index construction are discussed along with major risk and transactional factors that are somewhat unique to the asset class.

Returns data from a broad set of financial categories and broad set of agricultural returns measures are developed and presented in multiple frameworks to convey temporal persistence, relatedness, and portfolio considerations related to farmland. Issues related to the construction of claims based on agricultural assets are discussed.

Agricultural real estate investments have performed well compared to most other financial assets on most traditional measures of risk adjusted performance. However, the difficulties in direct investment remain and the need to develop securitized conduit exposures to farmland returns is identified.

The study presents a unique set of farmland returns measures and examines the stability of the statistics used to describe these through time. Novel characterizations of the data compared to traditional assets helps investors and asset owners accurately understand the exposure to farmland returns.

This chapter examines the involvement of finance companies in the purchasing and leasing of Australian farmlands. This is a new global phenomenon as, in past decades, finance companies have lent money to farmers, but have rarely sought to purchase land themselves. We investigate and discuss the activities of the Hancock company – an asset management firm that invested in farmland in northern NSW. Material on the activities of Hancock and other investment firms were obtained from documents on the public record, including newspaper reports. Semi-structured interviews with community members were conducted in the region of NSW where Hancock operated. Australian agriculture is being targeted for investment by companies in the finance industry – as part of a growing ‘financialization’ of farming. While it is financially beneficial for companies to invest, they do not do so in ‘empty spaces’ but in locations where people desire to live in a healthy environment. The Hancock company was criticized by community residents for failing to recognize the concerns of local people in pursuing its farming activities. To date, there have been few studies on the financialization of farming in Australia. By investigating the operations of the Hancock company we identify a number of concerns emerging, at the community level, about an overseas company running Australian-based farms.

As one of its major strategies, China has made a new plan to further expand High Standard Farmland (HSF) to all permanent basic farmland (80% of total farmland) for grain security over the next decade. Yet, what will be the impact of farmland infrastructure investment on agrifood systems? The paper aims to systematically evaluate the multiple effects (food security, economy, nutrition and environment) of expanding HSF construction under the context of the “Big Food vision” using an interdisciplinary model.

An interdisciplinary model – AgriFood Systems Model, which links the China CGE model to diet and carbon emission modules, is applied to assess the multiple effects of HSF construction on agrifood systems, such as food security and economic development, residents’ diet quality and carbon emissions. Several policy scenarios are designed to capture these effects of the past HSF investment based on counterfactual analysis and compare the effects of HSF future investment at the national level under the conditions of different land use policies – restricting to grain crops or allowing diversification (like vegetables, and fruit).

The investments in HSF offer a promising solution for addressing the challenges of food and nutrition security, economic development and environmental sustainability. Without HSF construction, grain production and self-sufficiency would decline significantly, while the agricultural and agrifood systems’ GDP would decrease. The future investment in the HSF construction will further increase both grain production and GDP, improve dietary quality and reduce carbon emissions. Compared with the policy of limiting HSF to planting grains, diversified planting can provide a more profitable economic return, improve dietary quality and reduce carbon emissions.

This study contributes to better informing the impact of land infrastructure expanding investment on the agrifood systems from multiple dimensions based on an interdisciplinary model. We suggest that the government consider applying diversified planting in the future HSF investment to meet nutritional and health demands, increase household income and reduce carbon emissions.

The purpose of this study is to examine the return sensitivity of public farmland and timberland real estate investment trusts (REITs) to private-equity farmland, timberland and real estate, long-term corporate bonds and large- and small-cap stocks. The study also examines time-dependent contributions of selected asset classes to farmland and timberland REIT volatility.

The authors use a multi-factor asset pricing model under a seemingly unrelated regression framework to evaluate farmland and timberland REIT returns, and a state-space model with the Kalman filter to evaluate the time-dependent contributors of farmland and timberland REIT volatility. The authors first perform orthogonalized regressions to obtain pure independent factors, and then decompose volatility into individual asset components.

Significant loadings on financial assets are found for both farmland and timberland REITs, suggesting that they are generally driven by some common state variables. Large-cap stocks are found to be the major contributor of farmland and timberland REIT volatility, despite some differing patterns over time.

Empirical analysis of farmland REIT is very scarce. The authors compare the risk-return characteristics of farmland and timberland REITs under a state-space framework with the Kalman filter. This study can improve the understanding of the roles of farmland and timberland REITs in a multi-asset portfolio.

The purpose of this paper is to examine the use of Section 1031 of the Internal Revenue Code (IRC), a piece of US tax law that allows for tax‐deferred exchanges of like‐kind property.

The paper derives a theoretical premium value for exchanges and presents the first national level analysis of Federal tax data on the use of like‐kind exchanges involving farmland between 1999 and 2005.

There is significant interest in Section 1031 from stakeholders in rural communities because there is widespread belief that the recent growth in farmland values may have, in part, been stimulated by Section 1031 exchanges of farmland. Despite these concerns, little is known about the extent of such exchanges.

This paper provides insight into the value and use of the IRC's Section 1031 provision. Based on simulations of a theoretical model using plausible assumptions about asset growth, the paper shows how proposed tax changes will affect the tax value of the deferral.

This article aims to explore recent trends in farmland rental markets using data for the state of Illinois. Trends in the types of rental agreements used and the relationship between the rental rate for those contracts, land values, crop revenues, production costs, and farm returns are examined.

Data from various sources and at different levels of aggregation for the state of Illinois are used to provide illustrations of historical trends in farmland rental agreements and rental rates, and how they are related to various market and industry factors. Focus is placed on the more recent period since 2005 characterized by high commodity price levels and volatility.

The majority of farmland in the Midwest is controlled under rental agreements which are increasingly of the fixed cash rent type. Rental rates have increased, but at a slower rate than farm returns. Average rental and interest rates imply that land values are consistent with the current market environment. Aggregate rental rates mask considerable variation in farm‐level rents, only a portion of which can be explained by differences in soil productivity. Given the current level of price volatility, the tenure position of a farm operation has a significant effect on downside risk exposure.

The illustrations provided in this paper should be of interest to researchers working in the area of farmland values and rental agreements, as well as to practitioners including farmers, landowners, and professional farm managers. The findings should motivate additional research and recognition of the importance of tenure position to the performance and risk exposure of grain farms.

The purposes of the study are to compare the investment behavior of farmers in Kazakhstan as a transforming country and in Germany as a Western industrialized country as well as to analyze whether the investment behavior of farmers is consistent with the normative benchmarks of the net present value approach or the real options (RO) approach.

The paper conducted an experiment with 100 Kazakhstani and 106 German farmers. The first part of the experiment describes an investment opportunity in an agricultural and in a non-agricultural treatment. The second part refers to a Holt and Laury lottery to determine farmers' risk attitude that could influence the investment behavior.

The results show that both approaches do not provide an exact prediction of the investment behavior of farmers. However, German farmers invest later than Kazakhstani farmers meaning that the investment behavior of German farmers is closer to the RO approach. This might imply that German farmers are more likely to take into account the value of flexibility when making investment decisions than Kazakhstani farmers.

Since investment behavior is country-specific, it is worth investigating whether farmers from other transforming countries would show different investment behavior compared to farmers from other Western industrialized countries. Furthermore, decision-making behavior related to investments could be different from that related to disinvestments. Therefore, it may be interesting to analyze the disinvestment decisions of farmers in transforming and Western industrialized countries.

The results show that it is not acceptable to apply the results of experiments investigating the investment behavior of entrepreneurs in a transforming country to entrepreneurs in a Western industrialized country and vice versa. Furthermore, training for farmers is needed because there is still room for improvement in order to achieve the RO benchmark. Finally, taking into account RO effects could improve the results of policy impact analysis.

This is the first experimental study comparing the investment behavior of farmers from a transforming country and from a Western industrialized country.

The purpose of this paper is to examine the factors that lead to the controversy within the existing empirical literature on the relationship between land tenure and agricultural investments in China.

This study conducts a meta-regression analysis (MRA) based on 265 samples from 29 selected studies. These studies are collected from different regions and populations; therefore, this study utilizes a random-effects meta-regression model to control between-study heterogeneity.

The empirical results show that the variable “land-related long-term investments” significantly affects the relationship between land tenure and agricultural investments. The variables: “ration land,” “land titling” and “land transfer rights” all have significant effects on this relationship, but at different levels. The study area (e.g. “western China,” “central/inland China,” “two regions contained”), “plot level,” “panel data,” “sample size,” “considered endogeneity” and “off-farm employment” variables all significantly influence the relationship. Additionally, the results show that the relationship is significantly affected by the survey time.

Policymakers should treat the existing research conclusions with caution and pay more attention to defining land tenure. The relationship between land tenure and agricultural investments also depends on regional resource availability. Therefore, land property rights policies should be region-specific in order to successfully encourage agricultural investments.

In this study, the author collectively examines existing empirical studies to investigate whether their inconsistent results are affected by research characteristics. To the author’s knowledge, this is the first study that analyzes land tenure and agricultural investments in China using MRA. Future research should refine the definition of land tenure, the selection of agricultural investment types, the research method and the method of data collection.

After its adhesion to the EU in 1986 Portuguese agriculture benefitted from a continuous flow of European funds aimed at the modernization of the sector in order that it might face the shock of competition with more developed agricultures.

However, enough evidence exists to show that the crowding out of Portuguese capitals was counterproductive to the political objectives. In fact, despite the EU transfers, in only two of the years from 1980 to 2009 did agricultural investment attain identical levels to those prior to integration.

If one considers investment as being the best indicator to explain the poor results of Portuguese agriculture over the last three decades, my argument is that this evolution needs a retrospective analysis focusing on the concept of financialization of the economy induced by EU and national policies. Therefore, this chapter is an explanatory attempt to open a broad discussion on the role of financialization in agriculture and rural development issues.