Land values and agricultural expansion into dry regions of Argentina

Abstract

Over the past two decades, agriculturaldemand has driven significant increases in food andland values. This study examined land value trends inArgentina’s expanding agricultural belt, focusing onthe dry periphery and its correlation with the morehumid core. Analyzing real estate data (2000–2020),we found that core land values doubled, reaching lev-els comparable to the agricultural cores of the US andBrazil by 2018–2020. Periphery’s value, meanwhile,appreciated rapidly in the first years, but stabilizedafterward at levels of 35–40% of those in the core,converging with those observed in the dry peripheriesof the US and Brazil. The stagnation of agriculturalland values in Argentina’s periphery, despite risingproductivity, did not respond to increasing costs ordeclining grain prices. We suggest that the observedstagnation is the result of long-term agricultural per-ceptions in terms of production limitations associatedwith climate risks and/or regulations. The fact thatthe periphery-core land valuation is lower than theperiphery-core productivity and profit suggests that Argentina’s agricultural frontier is advancing con-servatively and is driven by realized profit rather thanspeculation.