In search of greener pastures - improving the REINZ farm price index
A good farm price measure captures the price that a ‘representative’ farm would sell for each period. In reality, though, there is no representative farm and, even if there was, it would not sell every period anyway. Farms are not like bottles of milk. They are not identical and their prices are not easily comparable. Moreover, farm price measures must rely on a small, and changing, sample of farm sales from which they must disentangle like-for-like price changes. Keeping in mind that the quality of any farm price measure will be limited by the low number of farm sales, particularly during periods of stress, this paper sets out to improve on currently available measures of farm prices by controlling for the different characteristic of farms sold.