Relationship of selected parameters to farm sale values in three Virginia counties

Abstract

Thirty-eight farm sales occurring over a five year period in two adjacent Coastal Plain counties and 84 farm sales in a Piedmont county were studied in an effort to identify and analyze factors affecting sale price. The effect of soil productivity and landscape characteristics were of particular interest in this study. The effect of soil productivity on farm sale values was found to be significant in both study areas but was somewhat Overshadowed by other considerations. Factors affecting sale price in the Coastal Plain study area were: (1) inflation, (2) location, (3) proportion of farm in cropland, (4) soil productivity, and (5) value of improvements. Eighty percent of the variation in sale price per hectare could be accounted for by a multiple regression equation which included variables representing each of these factors. Factors affecting sale price in the Piedmont study area were: (1) value of improvements, (2) proportion of farm in cropland, (3) inflation, (4) soil productivity, and (5) size of flue-cured tobacco allotment. A multiple regression equation including variables representing each of the factors accounted for slightly less than 50% of the variation in sale price per hectare. The effect of tobacco allotment on sale price was found to be considerably diminished from that found by previous studies. Crop yield ratings were more highly correlated with sale price per hectare than were SCS land capability classes among the Piedmont farm sales. The opposite was true for Coastal Plain sales. Classes I, II, and III lands were found to be positively correlated with sale price per hectare while Classes IV, VI, and VII were negatively correlated with sale price per hectare in the case of Coastal Plain farm sales. None of the three land capability classes were significantly correlated with sale price per hectare in the case of the Piedmont farm sales. A weighted average of all land classes occurring on each farm was found to be significantly related to sale price. Crop yield ratings for forages, soybeans, and small grains were found to be significantly related to sale price in the case of the Piedmont farms. Yield ratings for small grains were also found to be significantly related to sale price in the case of the Coastal Plain soils. Indices of soil productivity were found to be more highly correlated with sale price among the Coastal Plain farm sales than was the case among the Piedmont sales. The soils and topography of the Coastal Plain are more conducive to intensive crop production. In both study areas, a closer relationship was found between soil productivity and sale price in those soil associations which were well suited to intensive cropping. Farm sale prices rose rapidly in both study areas during the five year period studied. Farm sale values increased at an average annual rate of 47% in the Coastal Plain sales. In both study areas, about 2% of all farms were involved in bona fide sales within a given year.