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Farmland Values Often Deviate from Agricultural Use Value

In many areas today, farmland values are influenced by factors other than agricultural productivity, such as urban influence and natural or rural amenities. The capitalized value of expected rents (rental rate divided by 10-year Treasury note) is a broad indicator of the amount of farmland value due to agricultural use. When the ratio of farmland values to capitalized rents exceeds 1.0, it suggests a deviation between the market value of farmland and its implied agricultural use value.
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