The causes of differences between the average agricultural land prices of hungarian counties

Abstract

Currently, there are significant differences between the average per hectare agricultural land prices of Hungarian counties. In this study, I endeavour to identify the causes of the price differentials by using a regression model. The data employed in the analysis relate to the years 2013, 2016 and 2020, and cover all of the 19 counties. The average yields of the main arable crops and the per capita GDP values of counties have a vigorous positive effect on land prices. Much like in numerous pieces of earlier research, it is demonstrated that larger average farm size also increases the price of agricultural land. Land prices are considerably higher in lowland areas with a smaller density of settlements than in otherwise similar but hilly or montainous regions, where there are more settlements. During the 2010s, agricultural land prices in Hungary grew dynamically. The rise of per capita GDP, average farm size and farm output per unit area played an important part in this, but perhaps the most consequential factor was the rise of the yields of the chief arable crops. The spectacular growth trend of average yields is attributable, above all, to the advance of agrotechnology. Since the fall of communism, Hungarian agriculture has shifted more and more towards intensive cereal production. Apparently, technological development has enhanced the profitability of cereal production relative to the other branches of agriculture, and it has thus raised the values of plots located in areas most suitable for arable farming.