Capitalization of direct payments in land rents: evidence from New EU Member States

Herck, Kristine Van; Swinnen, Johan; Vranken, Liesbet

doi:10.1080/15387216.2013.878230

Cited by 19 publications

(13 citation statements)

References 23 publications

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“…Some additional studies have considered the impact of agricultural support on market participants along the supply chain. For instance, an extensive number of studies have been carried out empirically to examine the effect of direct payments on farmland rental prices (Allen Klaiber et al [20,21], Michalek and Ciaian [22], Ciaian and Kancs [23], Van Herck et al [24,25], and Patton et al [26]). These studies indicate that between 10% and 80% of decoupled payments are leaked out of the farming sector by inflating the farmland rental or sales prices.…”

Section: Introductionmentioning

confidence: 99%

Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach

Olagunju

Patton²,

Feng³

2020

Sustainability

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The production stimulating impact of agricultural subsidies has been a well-debated topic in agricultural policy analysis for some decades. In light of the EU reform of the Common Agricultural Policy (CAP) in year 2005 in which agricultural subsidies were decoupled from current production decisions and the modification to this payment in 2015, this study investigates the impact of decoupled payments under these two reforms on livestock production in Northern Ireland. The study uses a farm-level panel dataset covering 2008–2016 period and employs an instrumental variable fixed effect model to control for relevant sources of endogeneity bias. According to the empirical results, the production impacts of decoupled payments were positive and significant but with differential impacts across livestock production sectors, suggesting that decoupled payments still maintain a significant effect on agricultural production and provide an indication of the supply response to changes in decoupled payments.

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Section: Introductionmentioning

confidence: 99%

Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach

Olagunju

Patton²,

Feng³

2020

Sustainability

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“…Econometric studies of the capitalisation effects of farm support payments have traditionally focused on the US (Barnard et al ., ; Weersink et al ., ; Goodwin et al ., ; Lence and Mishra, ; Roberts et al ., ; Kirwan, ) . More recently, some contributions have appeared focusing on the EU or its Member States (MS) (Patton et al ., ; Breustedt and Habermann, ; Ciaian and Kancs, ; Kilian et al ., ; van Herck et al ., ; O'Neill and Hanrahan, ; Guastella et al ., ; Michalek et al ., ; Klaiber et al ., ). With the exception of Guastella et al .…”

Section: Introductionmentioning

confidence: 99%

“…() and van Herck et al . (), who use data aggregated respectively at the regional, municipality and country level, all the studies employ farm‐level data for the empirical analysis finding robust evidence of capitalisation.…”

Section: Introductionmentioning

confidence: 99%

The Capitalisation of CAP Payments into Land Rental Prices: A Panel Sample Selection Approach

Guastella¹,

Moro²,

Sckokai³

et al. 2017

J Agricultural Economics

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The empirical literature suggests that farmland prices and rents capitalise agricultural subsidies and that the 2003 reform of the EU Common Agricultural Policy, which decoupled subsidies from production and attached them to land, may have increased the extent of the phenomenon. Employing a farm-level dataset, the Farm Accountancy Data Network (FADN) for Italy, we investigate this issue while accounting for selectivity, endogeneity and unobserved individual heterogeneity. To understand the impact of the reform we compare the estimates of capitalisation rate for decoupled payments with those for coupled payments. After correcting for unobserved individual heterogeneity and selectivity, our results reveal no capitalisation of coupled payments and only limited capitalisation of decoupled area payments into farmland rents in Italy.

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“…However, a large percentage of these payments will remain in the hands of the farmers. Moreover, capitalization of direct payments is lower in countries where more land is used by corporate farms, reflecting a stronger bargaining position of corporate farms and unequal access to subsidies in these countries [51]. This is also the case in Slovakia, where large farms use most of the farmland.…”

Section: Cap Paymentsmentioning

confidence: 99%

The Factors Affecting Farmland Rental Prices in Slovakia

Takáč

Lazíková

Rumanovská

et al. 2020

Land

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Agricultural land is a limited natural resource with increasing economic value. This study analyses land rental relationships in Slovakia, including legal rental regulations, and identifies the impact of certain factors, such as the European Union Common Agricultural Policy (CAP) payments, and geographical and economic factors on land rental prices. From the results of econometric models, it was found that certain CAP payments have an effect on rental prices, mainly the single area payment scheme (SAPS), payments for agri-environmental-climate schemes (AECS), and animal welfare, which were found to have positive effects. Other important factors found to influence rental prices are economic indicators (such as total revenue share of total costs, share of revenue from agricultural production in terms of total revenue, share of production costs as a percentage of total costs, wages, and number of employees) and geographical factors (such as region or partial production areas). However, the distance of the farm from the district city (LAU 1) and the share of farmland affected by natural constraints do not considerably affect rental prices in Slovakia. Land consolidation is a statistically significant factor according to the models; however, its impact is almost zero. Knowledge of these factors constitutes important know-how, not only for policy makers but also for the actors operating in the land rental market (e.g., landlords, tenants, experts on land valuation, and real estate agents).

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Capitalization of direct payments in land rents: evidence from New EU Member States

Cited by 19 publications

References 23 publications

Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach

Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach

The Capitalisation of CAP Payments into Land Rental Prices: A Panel Sample Selection Approach

The Factors Affecting Farmland Rental Prices in Slovakia

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