Question

Three farms at 1,000 acres have been offered for sale for business development within the same region. Each farm uses current best practices on input costs.

Farm A = Avg market price for crops = $ $10.50/bushel. Avg yield = 34 bushel/acre. Avg production cost = $162. Rank= Farm B= Avg market price for crops $10.50/bushel. Avg yield = 38 bushel/acre. Avg production cost = $132. Rank = . Farm C = Avg market price for the crops = $10.50/bushel. Avg yield = 41 bushels/acre. Avg production cost = $157. Rank = .

a) Rank each farm

b) Does the fertility alone explain the value of land or are there other factors at play that should go into a compensation offer? Why or why not?

Answer 1

Particulars	A	B	C
Average Yield (per acre)	34	38	41
Total area (acre)	1000	1000	1000
	34000	38000	41000
Average market price ( per bushel)	10.50	10.50	10.50
	357000	399000	430500
-( Average production cost )	162	132	157
Profit	356838	398868	430343

Rank

3

2

1

No, Fertility alone does not explain the value of land There are lots of other factors also to be considered while valuing the land . Some of those factors are

• Climate - Climate is a crucial factor for the value of land especially the land is for the agriculture purpose
• Water - Water is considered to be the most important factor while valuing a land
• Availability - Availability of essential things impact on the value of land

Some other factors are

• Culture
• Technology
• Affordability
• Availability
• Structure
• Location
• etc...