ABSTRACT
One problem with the use of the data is the frequent assumption that the reported value of farmland is equal to the discounted present value of cash returns from farmland's use in agriculture, its agricultural use value. Several factors may contribute to the divergence between farmland's agricultural use value and its market value. Government payments associated with the control of farmland may also contribute to the divergence of farmland's market value from its agricultural use value. Farmland's market value may also diverge from its agricultural use value because it simultaneously earns returns in addition to those associated with agricultural production. There are several reasons why it is important to separate farmland's agricultural use value from its market value. Proxies for variables used to separate agricultural farmland values and nonagricultural value from market value are not readily available. D. A. Klinefelter used a simple linear model emphasizing the importance of capitalized agricultural rents in determining agricultural farmland's value.
