Explaining The Changes of Agriculture Land Prices In Lithuania

Abstract

This article investigates the recent changes of agricultural land prices in Lithuania and quantitively assesses the most important factors affecting it. Land is one of the main scarce resources and it distinguishes itself among others by the inelasticity of price change to quantity, meaning that the changes in land prices are affected by demand and in very limited extend by supply. Taking this into account, it is important – from the practical as well as the theoretical points of view – to know these factors and, if needed, take regulatory measures. As the case of Lithuania suggests, the recent rapid growth of land prices is mainly driven by general economic performance (GDP), EU and national financial support provided to the Lithuanian agriculture sector and the regulation of agriculture food prices (the setting of purchase prices).

The Evaluation of Negative Factors of Direct Payments under Common Agricultural Policy from a Viewpoint of Sustainability of Rural Regions of the New EU Member States: Evidence from Lithuania

“…Nonetheless, it also has some drawbacks, especially in the environments it was not designed for. In post-Soviet countries (most of which, including Lithuania, joined EU in 2004), the substantial influx of financial capital in a form of DP to rural regions, where the transformation processes from planned economy to a market-driven economic environment were not fully absorbed leaving the former employers not operable and a mass of population unemployed, led to the initial land grab that resulted in accumulation of agricultural land in hands of big agricultural entities [36], which became power centers on which local citizens economic welfare depended, and even aspirations for partial substituting of legitimate authorities have been observed [37]. This was later converted to a political power as local population tend to vote for the people (in particular case, owners and managers of agricultural entities) who they consider responsible for their personal wellbeing [38].…”