Export Demand, U.S. Farm Income, and Land Prices: 1949-1985

The growing openness of the U.S. economy has caused world supply and demand conditions to have significant farm-level impacts, emphasizing the important macroeconomic linkages between capital, goods, and factor markets in agriculture (Schuh 1983). This study considers the linkage from the international grain market to U.S. farm income in the post-war period, 194985. This linkage suggests that export demand may also have played an important role affecting land and other input prices through the derived demand relationship. Burt (1986), Phipps (1984), and Robison, Lins, and Venkataraman (1985) have each shown that land prices are closely tied to real and expected net returns to farming. This study seeks to supplement their findings by examining the relative role of exports in determining these returns over time. Empirical results clearly show the export/farm income connection. The further linkage to land values, while present, is somewhat less clear.