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Rental spreads for share versus cash leases in Ilinois

Rental spreads for share versus cash leases in Ilinois This study utilizes an expected utility framework to conceptualize the riskadjusted valuation of cash versus share leases for farmers and landowners. Farmlevel data then are used to empirically estimate the rental spread between these leases in Illinois, and to econometrically evaluate how these spreads are related to risks and other farm characteristics. The results indicate that nonrisk factors likely are the primary determinants of the magnitude and sign of the rental spread. In particular, high cash rent may be a bidding strategy to control additional leased acreage and thus expand farm size. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Agricultural Finance Review Emerald Publishing

Rental spreads for share versus cash leases in Ilinois

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0002-1466
DOI
10.1108/00214940280001135
Publisher site
See Article on Publisher Site

Abstract

This study utilizes an expected utility framework to conceptualize the riskadjusted valuation of cash versus share leases for farmers and landowners. Farmlevel data then are used to empirically estimate the rental spread between these leases in Illinois, and to econometrically evaluate how these spreads are related to risks and other farm characteristics. The results indicate that nonrisk factors likely are the primary determinants of the magnitude and sign of the rental spread. In particular, high cash rent may be a bidding strategy to control additional leased acreage and thus expand farm size.

Journal

Agricultural Finance ReviewEmerald Publishing

Published: Nov 1, 2002

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