The Impact of Ethanol Plants on Cropland Values in the Great Plains

Corn ethanol plants consume large amounts of corn and their location has the potential to alter local crop prices and surrounding agricultural land values. The relationship between ethanol plant location and agricultural land prices is examined using data obtained from the Agricultural Credit Survey administered by the Federal Reserve Bank of Kansas City. The findings indicate that the portion of land price changes attributable to location is consistent with previous estimates of basis changes associated with ethanol plant location. As a result, the land markets appear to be rationally adjusting to the location of ethanol plants.