Agricultural Land Prices Research Articles

Explaining The Changes of Agriculture Land Prices In Lithuania

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 sensitivity of the costs of reducing emissions from deforestation and degradation (REDD) to future socioeconomic drivers and its implications for mitigation policy design

Climate change mitigation policies for the land use, land use change, and forestry (LULUCF) sector are commonly assessed based on marginal abatement cost curves (MACC) derived from optimization models or engineering approaches. Yet, little is known about the space of validity of MACCs and how they are influenced by changes in main underlying drivers. In this study, we apply the Global Forest Model (G4M) to explore the sensitivity of MACCs to variation of socioeconomic drivers of deforestation, afforestation, and forest management activities. Particularly, three key factors are considered: (I) wood price, as an indicator of timber market developments; (II) agricultural land price, as a proxy representing the developments on agricultural markets; and (III) corruption coefficient, representing the progress in institutional development and measuring abatement costs use efficiency. The results indicate that the MACCs are more sensitive to the corruption coefficient than to agricultural land price and wood price. Furthermore, we find that the MACCs are more robust with high carbon dioxide (CO2) price and that the sensitivity of the MACCs is higher at low CO2 prices. In general, it can be concluded that when assessing medium-term mitigation policies characterized by low CO2 prices, MACCs need to be developed in-line with institutions currently in place. When designing long-term mitigation policy characterized by high CO2 prices, the role of the analyzed drivers in MACCs estimation is less important.

Effects of no-tillage on agricultural land values in Brazil

Agricultural land prices may be determined by both productive and speculative factors. Among productive factors, investment in soil conservation in areas destined for agricultural activity is recognized as a positive contributor to land value. No-tillage, or no-till, is a farming system that integrates fundamentals of conservation agriculture and offers a number of advantages in agricultural production. No-tillage systems are associated with a range of positive impacts on land prices, leading this type of soil management system to predominate in Brazil. The object of this study is to verify whether no-tillage systems increase agricultural land prices in Brazil. To this end, data are drawn from the 2006 Agricultural Census, administered by the Brazilian Institute of Geography and Statistics (IBGE), including data on soil management systems (no-tillage, minimum tillage, and conventional tillage), as well as state, regional, and national land prices in Brazil. Results indicate that agricultural lands under temporary crop cultivation that are planted using no-tillage systems are of greater value than lands planted under other soil management systems. This increase in value associated with no-tillage may be observed in the Brazilian States with the highest levels of agricultural production, including Paraná, Rio Grande do Sul, São Paulo, Mato Grosso do Sul, Mato Grosso, Goiás, and Bahia. These results should constitute an important factor in agricultural producers’ decision-making regarding the adoption practices proposed by conservation agriculture.

The Investigation of Factors Influencing the Market Prices of Agricultural Land in Hungary

The role of land (as the basis and the resource of agricultural production) is the most significant among the resources of production. The ownership of land, its use, the issue of its price and value, they have been key problems of political, social, legal and economic decisions. There were theoretical and practical experts throughout the world, and we intensively have to deal with the issue of land evaluation. In our research using empirical data collection and statistical methods, we examined not only the factors have influenced on land prices, but its effect as well.
 We have proven that the „golden crown”-based land evaluation system (golden crown is a measurement unit of the quality of agricultural land in Hungary) can show the land quality differences even today, but in spite of this, the results of calculations (and also the practice) increasingly justify and urge the necessity of the introduction of a modern land evaluation system.
 namese professionals graduated in Hungary, the reputation and popularity of Hungarian agricultural products and technologies, the achievements of R&D in the field of agriculture – could not be utilized from Hungarian side. Vietnam, however still preserved its socialist political establishment,but in terms of its economic development strategy and economic policy has gradually been standing on the basis of market orientation. Vietnam, with its population of ninety million shows a rapid and successful development and it means good opportunities even for Hungarian entrepreneurs.
 It would be a mistake to leave these potentials unused.
 JEL Classification: Q10, Q24, Q30

Zmiany dochodów indywidualnych gospodarstw rolnych z dzierżawy ziemi użytkowanej rolniczo w Polsce w latach 2005-2016

W ostatnich latach w Polsce rosną ceny ziemi rolniczej, a maleje jej podaż na rynku prywatnym. Sprzyja to rozwojowi zjawiska dzierżawy, która w wielu krajach europejskich jest podstawą prowadzenia działalności rolniczej. Celem opracowania jest charakterystyka dochodów otrzymywanych przez gospodarstwa indywidualne w Polsce z dzierżawy ziemi użytkowanej rolniczo i zmian dochodów w latach 2005-2016. Podstawę analiz stanowiły jednostkowe dane empiryczne, dane z badań sondażowych przeprowadzanych corocznie przez GUS, a ich uzupełnieniem były dane IERiGŻ-PIB, ANR (obecnie KOWR) i opracowania wtórne GUS. W wyniku badań stwierdzono, że dochody z dzierżaw prywatnych uległy podwojeniu w latach 2005-2016 i stanowiły ważny składnik dochodów korzystających z nich rodzin, ale z deklaracji badanych wynika, że miały one niewielką skalę (przeciętnie 0,3% gospodarstw indywidualnych). Grunty rolne były wydzierżawiane przez małe gospodarstwa, których głównym źródłem utrzymania była praca najemna, czasem za granicą, a kierownicy byli starsi niż przeciętnie. Często sytuacja rodzinna była nieuregulowana (np. starszy rodzic z dorosłym, ale jeszcze samotnym dzieckiem, które jeszcze ostatecznie nie zdecydowało o swej przeszłości), a okresowe wydzierżawienie gruntów pozwalało na podjęcie decyzji o ewentualnej sprzedaży gospodarstwa w późniejszym czasie.

Sugarcane expansion and farmland prices in S\xe3o Paulo State, Brazil

BackgroundBrazil is the world’s largest sugarcane producer, and its production is concentrated in south-central and northeast regions, particularly in the state of São Paulo. The land use change, principally from the increasing sugarcane production, may reflect in the farmland prices. The aim of this study is to evaluate the extent to which agricultural land prices in São Paulo are determined by variations in cultivation and prices of three products that represent a significant share of agriculture in the state: sugarcane, soy and corn, in a low-inflation environment.MethodsAnalysis is based on data from the Rural Development Offices (EDR) from 1997 to 2013. A simple panel data model is constructed with land price as the dependent variable, subdivided, according to the definition of the São Paulo State Institute of Agricultural Economics, into first- and second-class croplands. Cultivation area, unit price of the products, and lease value are explanatory variables, according to each crop. Inflation and the overall production value of São Paulo’s farming production, excluding the production values of corn, soy and sugarcane, also serve as explanatory variables.ResultsThe results show that in São Paulo, although part of the land price variation can be explained by the variables associated with their productive use, the impact of inflation indicates that land’s function in storing value contributes significantly to land prices.ConclusionsThe most prominent conclusion is that expansion in sugarcane cultivation has led to higher farmland prices in the state of São Paulo.

Ceny ziemi rolnej w Polsce na tle Unii Europejskiej

Long before Poland̛s accession to the European Union, the prices of agricultural land were of interest not only to potential investors in the agri-food sector, but also to speculators, whom agroeconomists were tasked with monitoring. The aim of this study was to assess changes in agricultural land prices in Poland compared to the European Union and to identify variables that strongly depend on the average level of prices of agricultural land in the European Union. This article also demonstrates that in EU countries there is a significant correlation between agricultural land prices and the value of direct payments and the value of gross domestic product per capita.

Exploitation of Agricultural Land in the Czech Republic and EU Countries

The primary objective of the paper is to assess the extent and exploitation of agricultural land in the CR and EU countries based on selected macro-socioeconomic indicators in order to determine the position of the CR and future desirable exploitation, protection and stabilisation of agricultural land in the CR. The following methods will be employed in order to meet the objective: (1) The Coefficient of Geographical Association (CGA) and my own modified coefficients of association reflecting the impact of exploitation of agricultural land on indicators of the country’s economic level. (2) Comparison (shrinkage of agricultural land, workforce in agriculture and market price of agricultural land in selected countries). (3) The Coefficient of Ecological Stability to assess the extent of stable and unstable areas in EU-27 countries. The following data are used for calculations: Eurostat (2009, 2015), World Bank and FAOSTAT (1993-2014). The extent of agricultural land in the CR (2014/1993) has been decreasing more slowly than in the detailed comparison countries (5 countries with the lowest CGA). The price of the agricultural land (2014) is lower than in France, Germany and Poland; nevertheless, the actual price rates are not as contrasting against these countries if purchase parity is considered. The Coefficient of Ecological Stability ranks the Czech Republic in the second half of the list of EU-27 countries (22nd place). While the ecological stability of land has decreased slightly in Germany and France (2009-2015), an improvement has occurred in the CR.

Intervention on the agricultural land market in relation to the end of the transitional period for purchasing agricultural land by foreigners

Research background: A traditional form of state intervention in agriculture comprised regulating the rights to ownership. One of the often discussed aspects of regulations refers to those binding for foreigners.Purpose of the article: The objective of the article was to analyse the position (of the European Economic and Social Committee and the Polish legislator) regarding the phenomenon of purchasing agricultural property by foreigners as well as the opinions of farmers on the consequences for the agricultural land market resulting from ending the transitional period in Poland for purchasing agricultural property by foreigners as on 1 May 2016.Methods: Direct studies were conducted in 2015 among 86 farmers in the Warmian-Masurian Voivodeship.Findings and Value added: The main reason for such a discussion conducted globally and in Europe is the phenomenon of excessive concentration and the use of land for non-agricultural purposes. Whereas, the European Economic and Social Committee indicates that in order to limit unfavourable practices in the EU member states, activities directed at preventing speculation, preserving local traditions and ensuring a proper usufruct of land should be permitted. The majority of farmers were afraid of the changes in the agricultural land market after the end of the transitional period in purchasing agricultural property by foreigners. They emphasised the above by expressing opinions on regulations binding in the transitional period and their effectiveness. With regard to the provisions of the Act of 5 August 2015, farmers were afraid of an increase in prices of agricultural land and the capital advantage of foreigners.

Testing for regional convergence of agricultural land prices

The focus of this paper is on spatial market integration in agricultural land markets. We scrutinize the applicability of the law of one price to land markets and distinguish between absolute and relative versions of this “law”. Panel data unit root and stationarity tests are applied to land sale prices in the German state Lower Saxony. Three main clusters with different price developments are detected. Our results indicate that the law of one price holds only locally due to structural differences among regions.

Factors affecting the price of agricultural land in Slovakia

Land as a significant natural resource becomes an object of competition on the agricultural land market. The price of agricultural land plays an important role in its acquisition. The process of price formation is influenced by many factors. The aim of the paper is to identify the most significant of them by the econometric model applied on data from the Register of Offers of Agricultural Land. The most significant factors are proportion of the offered area on the total area of the plot and the location of agricultural land with the positive effect on the land price as well as the offered plot area and the distance of the offered plot from a district city with the negative impact on the land price. However, the verification of the correctness of this assumption remains questionable for the present as it is not resolved how to measure and quantify the landowner’s subjectivity.

Dynamics of Agricultural Productivity, Land Rent and Land Price Relations in Punjab

The analysis of data for post liberalization period from 1997–98 to 2010–11 revealed the significant dynamics involved in relative changes in land productivity, land rent and land prices in Punjab agriculture. It was observed that in state, due to increased demand of land for agricultural and non-agricultural purposes, both the land rent and price of land increased at a much higher rate as compared to the increase in average land productivity. While the inter-zonal differences in land productivity and land rent declined significantly over the study period, differences in land prices among different zones has been further widened. The low supply of land in comparison to its demand resulted in high rise of land rent and land prices making investments in land market for agricultural activities unviable. The polices aimed at promotion of the non-agricultural sector may help in pulling out a significant proportion of rural population from agriculture, and thus releasing the pressure on agricultural land for dependence.

Defining fair market value of land in a thin land market of India to pay just compensation - a case study

India has a new Land Acquisition Act LARR 2013. Its contents significantly differ from its earlier version of LAA 1894. But the Act continues to consider average market value of the adjacent lands as fair market value of the acquired plot and ignores the absence of active land market in India. Land plots in India are small and ownerships fragmented. The qualitative attributes of smaller land plots vary and hence their prices. Because of thin market, sales data are scanty and cannot be directly used for averaging. The new act has increased solatium to two to four times the average market value to obviate criticism of paying less to the landowners. This paper proposes to use rational method of computing for valuation of land to pay just compensation. This includes identification of attributes which affect agricultural land price and use the attribute differentials to modify the sale prices before averaging. Modified sale values then may be averaged to get the fair market value and used as a basis to pay just compensation.

The legal aspects of Ecosystem Services in agricultural land pricing, some implications from a case study in Vietnam's Mekong Delta

Ecosystem economic valuation has been proposed as an appropriate approach to account for natural resources. More specifically, the tangible and intangible values of ecosystem services (ES) associated with specific land uses/land covers have been appreciated by practitioners both in academia and policy arenas as useful accounting means for land use management. This paper explored how the outcomes from ecosystem valuation studies could be utilized to improve the current agricultural land pricing system in Vietnam's Mekong Delta. By reviewing the relevant legal documents, we highlighted some limitations of the current land pricing system and suggested reforms utilizing ES valuation results. By comparing the results of ES evaluation study for the prawn-rice rotational crops (PRRC) areas with their regulated agricultural land prices, one major limitation of the current pricing method was identified, that being its inability to capture the actual land profitability resulting from the classification system of lands which currently typifies PRRC areas as annual crops, similar to rice and vegetables. However, to register a dedicated classification for PRRC can be time consuming and costly due to the complexity of the relevant legal framework. As a response, an ES-based index to account for the differences between PRRC and other cultivation systems without having to thoroughly reform the legal system was recommended. Our recommendation is essentially in harmony with the Ministry of Environment and Natural Resources Decree, which allows for the application of correction factors according to local conditions. As a methodological contribution, this attempt to include ES information in legal systems could facilitate the better standardization of core terminologies and practical guidelines, two of the most important challenges to the mainstreaming of the ES concept in decision making and policy planning.

Land Market and Price of the Agricultural Land after the End of the Transitional Period

Abstract After the end of the transition period for the purchase of the agricultural land by foreigners, the legislation regulating the acquisition of the agricultural land was adopted for the purpose of harmonization of the Slovak legislation with the legislation of the European Union. The Law no. 140/2014 Coll. on the acquisition of ownership to the agricultural land and amending and supplementing determines the subjects that are legitimated to acquire the ownership to the agricultural land. In addition, due to the creation of the Register of Offers of the Agricultural Land, the legislation allows the landowner to set a price on the sale of the agricultural land. In Slovakia, apart from the administrative prices and the market prices, there is a new type of prices, so-called „supply price“. The aim of the paper is to sum up the impact of the current legislation on the land market and the prices of agricultural land.

UNDERSTANDING LAND IDLING AS A STRATEGIC BEHAVIOUR: A BRIEF NOTE USING THE REAL OPTIONS APPROACH

One possible explanation for land idling in a rapidly transforming economy can be found by looking at the value of the option to wait and hysteresis behaviour in the land market. If investors assume that the drop is temporary and that its long term prospects outweigh current holding losses, the market will observe some form of a zone of inactivity i.e., no selling and no additional buying. The fact that landowners elect to keep their valuable land underdeveloped for prolonged periods of time suggests that idled land is more flexible and valuable than what the current market price suggests. If the revenue from farming is insufficient to sustain the activity, land is left idle; although this operational decision is open to continuous revision. The numerical example shown in the paper shows that price of land can be substantially bolstered by the option to wait embedded in land. We argue that land market prices are based on more than the land’s total present value of its future income stream. In a transforming economy, the option to wait and change land-use are especially important to consider. Policy-wise, the government can discourage land idling by ensuring appropriate and suitable zoning of agricultural areas, strong adherence to the zoning conditions/plans as well as more far-sighted land conversion decisions. These efforts can go a long way to reduce the source and degree of uncertainty which is the most important cause of real option premium in land prices. Based on the nature and type of data available, future directions of research should emphasize on empirical testing of real options premium in sale prices of agricultural land.

UNDERSTANDING LAND IDLING AS A STRATEGIC BEHAVIOUR: A BRIEF NOTE USING THE REAL OPTIONS APPROACH

One possible explanation for land idling in a rapidly transforming economy can be found by looking at the value of the option to wait and hysteresis behaviour in the land market. If investors assume that the drop is temporary and that its long term prospects outweigh current holding losses, the market will observe some form of a zone of inactivity i.e., no selling and no additional buying. The fact that landowners elect to keep their valuable land underdeveloped for prolonged periods of time suggests that idled land is more flexible and valuable than what the current market price suggests. If the revenue from farming is insufficient to sustain the activity, land is left idle; although this operational decision is open to continuous revision. The numerical example shown in the paper shows that price of land can be substantially bolstered by the option to wait embedded in land. We argue that land market prices are based on more than the land’s total present value of its future income stream. In a transforming economy, the option to wait and change land-use are especially important to consider. Policy-wise, the government can discourage land idling by ensuring appropriate and suitable zoning of agricultural areas, strong adherence to the zoning conditions/plans as well as more far-sighted land conversion decisions. These efforts can go a long way to reduce the source and degree of uncertainty which is the most important cause of real option premium in land prices. Based on the nature and type of data available, future directions of research should emphasize on empirical testing of real options premium in sale prices of agricultural land.

Os fatores determinantes do preço da terra agrícola no estado de Santa Catarina

http://dx.doi.org/10.5007/2175-8085.2016v19n1p48O Estado de Santa Catarina apresentou valorização média do preço das terras de 12,2% a.a para o período de 2002 a 2010. A presente dissertação tem por objetivo principal analisar os determinantes do preço da terra agrícola nos municípios do Estado de Santa Catarina para o período de 2006 a 2011, bem como verificar os efeitos da espacialidade sobre o comportamento do preço da terra no estado, através da formação do preço dos ativos formulado por Keynes. Para tal finalidade, realizou-se uma revisão de literatura de escritores brasileiros referente ao preço da terra agrícola, assim, foi tratado o preço da terra, em Santa Catarina, as variáveis agropecuárias e a análise exploratória de dados espacial. A análise espacial justifica o uso da econometria espacial, para trabalhos que tratam da dependência na vizinhança. Com isso, pela análise do I de Moran univariado, nota-se que, para os anos de 2006 e 2011, a maioria das variáveis apresentaram I de Moran significativos. Na análise bivariada global, muitas variáveis apresentaram sinal negativo e significativo, enquanto que deviam apresentar sinal positivo; principalmente, no ano de 2011 esse fato foi mais frequente; sendo que apenas a variável ITR poderia apresentar sinal negativo, mas teve sinal positivo contrariando a teoria. Assim pela análise de AEDE, algumas variáveis estudadas podem contrariar a teoria. Essas variáveis são: imposto territorial rural, área colhida de milho, tipos de solo. Averígua-se que outras variáveis não agrícolas são necessárias para explicar o preço da terra agrícola em Santa Catarina.

The Fischler Reform of the Common Agricultural Policy and Agricultural Land Prices

Based on 7,300 agricultural land sales transactions, we estimate the effect of the 2003 reform of the E.U. Common Agricultural Policy on land prices. As opposed to the main body of the literature on agricultural land values, we do not start from a demand-oriented net present value approach or hedonic pricing method, but derive our reduced form pricing equation from a spatial land sales market model. Our empirical model accounts for spatial dependence and endogeneity of explanatory variables. A reduction of payments by 50 €/ha would decrease land sales prices by 445 €/ha before and by 984 €/ha after the reform. (JEL Q15, Q18)

A hedonic analysis of agricultural land prices in Pakistan`s Peshawar district

This study investigates determinants for agricultural land prices in Peshawar district of Pakistan. A linear hedonic model is used to analyze data set on sale prices of agricultural land parcels and their agricultural, location and environmental characteristics. Results show that agricultural land price is affected positively by soil fertility, amount of irrigation water and closeness to agricultural market. Among location characteristics, distance to city, distance to main road and distance to nearest houses have significant effects on land prices. Agricultural land located closer to city, main road or houses has significantly higher price compared to a more distant land. Environmental degradation such as polluted freshwater bodies has negative effect on nearby agricultural land prices. Based on these findings and review of relevant literature, the study recommends government intervention for conservation of agricultural land, investment in developing agricultural infrastructure such as dams, irrigation canals, roads, transport, agricultural markets, etc., and provision of subsidized fertilizers and other inputs to increase farmers’ returns and change their perception to favour using their land for agriculture.