Conservation Practices and the Growth of <scp>US</scp> Cash Rent Leases

Allen, Douglas W.; Borchers, Allison

doi:10.1111/1477-9552.12153

Cited by 10 publications

(9 citation statements)

References 12 publications

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“…This suggests that the biophysical benefits associated with NT and cover crops might take a long period of continuous use before they can realize any economic advantage, which is consistent with the conclusion of Soule, Tegene, and Wiebe (). Findings by Allen and Borchers () also confirmed that yield variability or production risk may be reduced by practicing NT.…”

Section: Restults and Discussionmentioning

confidence: 72%

Economic analysis of adopting no‐till and cover crops in irrigated cotton production under risk

Fan¹,

Liu

DeLaune³

et al. 2020

Agronomy Journal

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Adoption of soil conservation practices has been promoted to improve environmental and economic benefits across the United States. These practices are especially necessary for soil health improvement in the Southern High Plains where soils are prone to erosion and agricultural irrigation relies heavily on groundwater. Winter cover crops and no‐till cropping are two conservation practices for reducing soil erosion, but producers might face additional risks associated with adopting these practices. The objective of this study was to examine the profitability and risks associated with alternative tillage and cover crops (no cover crop, winter wheat [Triticum asestivum L.], and grass–legume mixture) for irrigated cotton (Gossypium hirsutum L.). Using data from a 6‐yr field experiment, net return distributions of each production system were evaluated and ranked across various risk aversion levels. The results showed that the average net returns were $1040 and $1049 ha−1 for conventionally tilled and no‐till cotton without a cover crop, while the net returns were $1121 and $1075 ha−1 for no‐till cotton with wheat and mixed cover crops, respectively. Producers adopting cover crops had a greater probability of getting a middle interval of net returns between $760 and $1370 ha−1. The results of risk analysis show that risk‐neutral and slightly risk‐averse producers prefer no‐till cotton production with wheat cover, while no‐till with mixed and wheat cover are the first and second most preferred systems for very and extremely risk‐averse producers. Sensitivity analysis confirms consistent profit effects of cover crops and no‐till adoption at multiple cotton price levels.

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Section: Restults and Discussionmentioning

confidence: 72%

Economic analysis of adopting no‐till and cover crops in irrigated cotton production under risk

Fan¹,

Liu

DeLaune³

et al. 2020

Agronomy Journal

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“…However, developed countries have private and government insurance programs and futures and options markets that reduce production and price risk, lowering the need for risk‐sharing contracts. Allen and Lueck (1992b,1993, 1998, 1999) and Allen and Borchers (2016) argue that in the United States, transaction costs and not risk preferences are the primary driver of contract choice. Huffman and Fukunaga (2008) and Fukunaga and Huffman (2009) find evidence more supportive of risk‐sharing using data from the 1999 Agricultural Economics and Land Ownership Survey.…”

Section: Rental Contract Risk and Incentives And Sharecroppingmentioning

confidence: 99%

The roles of risk preferences, selection, and uncertain returns on land contracts

Lee

Durbahn

Orazem

et al. 2023

Agricultural Economics

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Using panel data on a statistically representative sample of Iowa farmland parcels from 1997 to 2017, we analyze the factors determining whether land is farmed by the owner or rented out under a cash rent or crop share contract. The landowner's decision to rent or operate the land depends on the distribution of expected net returns to the land, and so estimates of the factors affecting rental terms will be biased if the sample only includes rental contracts and excludes the owneroperator. Land with higher mean and/or lower variance of expected net returns is most likely to be rented out. Participants in the rental market will include the most risk-averse landowners and the least risk-averse tenants, while the least risk-averse landowners operate their own land. Our empirical results suggest that the rising use of cash rent contracts and declining incidence of owner-operation and crop-share rental contracts is consistent with falling coefficient of variation in expected net returns per acre.

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“…If the burden of property tax is fully passed from a landowner to a renter, then its effects may deter production or change the riskiness of the planting decisions for the renter. As an example of the relationship between production practices and cash rents, Allen and Borchers (2016) find that the increased prevalence of cash rent contracts, as opposed to crop share rental contracts, has been the result of no‐till cultivation practices that have reduced the ability of a renter to exploit the landowner's soil. However, if none of the tax is passed on to the renter and is fully paid by the landowner, then taxing agricultural land would be decoupled from the farming decisions of the operators.…”

mentioning

confidence: 99%

Property Tax Incidence on Cropland Cash Rent

Dinterman¹,

Katchova²

2019

Applied Eco Perspectives Pol

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We estimate the property tax incidence on rented cropland, defined as the extent to which landowners can increase cash rental rates to shift the tax burden of property tax to renters. Using the Ohio's Current Agricultural Use Value (CAUV) Program, we are able to avoid issues where the market value of farmland determines the property tax as CAUV assesses farmland in Ohio based on a use-value formula with historical and state-wide prices, yields, and costs of corn, soybeans, and wheat. Our results indicate that cash rental rates in Ohio from 2008 through 2017 increased between $0.31 to $0.40 for each additional dollar of property tax levied on cropland in the short run. Further specifications taking into account lagged effects of property tax indicates a higher incidence of $0.61 higher cash rent for each additional dollar of property tax, although this is dispersed over a 3 year time period.

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Conservation Practices and the Growth of US Cash Rent Leases

Cited by 10 publications

References 12 publications

Economic analysis of adopting no‐till and cover crops in irrigated cotton production under risk

Economic analysis of adopting no‐till and cover crops in irrigated cotton production under risk

The roles of risk preferences, selection, and uncertain returns on land contracts

Property Tax Incidence on Cropland Cash Rent

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