Farmland value has more than quadrupled since 1940. Before the early 1950's, however, changes in farmland value had been closely related to changes in farm product prices and net farm income. But since that time, farmland value has increased substantially without a corresponding rise in net farm income. This widening spread between farmland values and net farm income created the interest for this study.

Our major objective was to identify the principal factors affecting farmland value and to estimate the effect of these variables. To accomplish this objective, we developed hypotheses to explain the changes in farmland value that included the effect of expected net farm income, government farm—program payments, expected capital gains, technological advance, farm enlargement, the number of voluntary transfers of farmland and an in creasing demand for land from a growing population.