This thesis develops a deterministic farmland value model which purports to explain the movements in farm asset prices in New Zealand during the 1962-1987 period. The incorporated value determinants are the expected returns to farmland, the impact of financial leverage, and the erosion in the real value of debt caused by inflation. The specified land value model is used to demonstrate that some central government agricultural policies may have induced a greater use of debt by farmland purchasers, and thereby led to significant increases in farm asset value levels during the analyzed period.