How Spatially Clustered are State-level Farmland Values?

Abstract

Farmland values are influenced by productivity levels, prices of pertinent crops, farm incomes, urban sprawl, and external investment pressure. Since cropping systems in a given region are similar to adjacent regions and soil productivity indexes change slowly across regions, it was expected that farmland values are spatially clustered even at the state level. We tested spatial correlation on US state-level farmland values from 1950 to 2014. Spatial correlation was detected in farmland values and percent changes in farmland values. These results indicate that traditional analysis techniques that ignore values of neighboring states may be dominated by advanced spatial analysis. Evaluation of state-level farmland values provide appraisers with insights into how a shock to farmland values impact values in surrounding states. Future analyses will validate these results by examining available sub-state and county-level data.