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Farmland Liquidization and Transaction Costs

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  • Takahashi, Daisuke

Abstract

This paper discusses why progress in farmland liquidization through leasing has been very slow in the agricultural sector in Japan, focusing on the transaction costs related to farmland lease. First, this paper points out that transaction costs are an important constraint for farmland lease, and argues by means of a survey of related studies, why transaction costs have a strong association with farmland. Next, it explores using partial equilibrium analysis to determine how the aggregated demand and supply of farmland is affected by the changes in the farmers’ activities that face a transaction cost. Following this, the paper estimates the extent to which farmland lease is affected by the characteristics of the farmland and local communities. The data used in the analysis is the prefectural panel data from the agricultural census for the years 1980, 1990, and 2000; the data excludes Hokkaido, Tokyo, Kanagawa, Osaka, and Okinawa. The result of the econometric analysis shows that the level of farmland lease is related to the variables representing the activities of local communities and the characteristics of farmland such as land improvement and conversion of farmland. These results emphasize the importance of developing and reinforcing institutions and organizations to lower the transaction costs in the farmland market.

Suggested Citation

  • Takahashi, Daisuke, 2012. "Farmland Liquidization and Transaction Costs," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 14, pages 1-19.
    • Handle: RePEc:ags:jpjjre:242124
    DOI: 10.22004/ag.econ.242124
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    References listed on IDEAS

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    1. Nakajima, Shinsaku, 2010. "Tenancy Contract Choice and Land Improvement Investment for Upland Farming," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 12, pages 1-19.
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    3. Arimoto, Yutaka & Nakajima, Shinsaku, 2010. "Review of Liquidization and Concentration of Farmland in Japan," Journal of Rural Economics, Agricultural Economics Society of Japan, vol. 82(1), pages 1-13, June.
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    5. Deininger, Klaus & Jin, Songqing, 2005. "The potential of land rental markets in the process of economic development: Evidence from China," Journal of Development Economics, Elsevier, vol. 78(1), pages 241-270, October.
    6. Michael R. Carter & Yang Yao, 2002. "Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 702-715.
    7. Ciaian, Pavel & Swinnen, Johan F.M., 2006. "AJAE Appendix: Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 88(4), pages 1-10, November.
    8. Deininger, Klaus & Jin, Songqing & Nagarajan, Hari K., 2008. "Efficiency and equity impacts of rural land rental restrictions: Evidence from India," European Economic Review, Elsevier, vol. 52(5), pages 892-918, July.
    9. Emmanuel Skoufias, 1995. "Household Resources, Transaction Costs, and Adjustment through Land Tenancy," Land Economics, University of Wisconsin Press, vol. 71(1), pages 42-56.
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    Cited by:

    1. Kusakari, Hitoshi & Nakagawa, Satoshi, 2013. "Optimal Behavior of Rice Farmers in the Imperfectly Competitive Land Lease Market in Japan: With a Focus on Transaction Costs and Uncertain Returns on Land Lease Investment," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 15, pages 1-18.
    2. Takayama, Taisuke & Matsuda, Hirotaka & Nakatani, Tomoaki, 2018. "The determinants of collective action in irrigation management systems: Evidence from rural communities in Japan," Agricultural Water Management, Elsevier, vol. 206(C), pages 113-123.
    3. Takayama, Taisuke & Horibe, Atsushi & Nakatani, Tomoaki, 2018. "Women and farmland preservation: The impact of women’s participation in farmland management governance in Japan," Land Use Policy, Elsevier, vol. 77(C), pages 116-125.
    4. Ernoiz Antriyandarti, 2017. "Impact of Surplus Labor Existence on Land Lease Market in Rural Central Java," GATR Journals jber133, Global Academy of Training and Research (GATR) Enterprise.
    5. Takahashi, Daisuke & Fujie, Takeshi & Senda, Tetsuji, 2021. "Conditions for Collective Land Use By Community Farming: Case Study of Six Prefectures in the Hokuriku and Kinki Regions of Japan," 2021 Conference, August 17-31, 2021, Virtual 315140, International Association of Agricultural Economists.
    6. Takahashi, Daisuke & Honma, Masoyoshi, 2015. "A Reexamination of the Agricultural Adjustment Problem in Japan," 2015 Conference, August 9-14, 2015, Milan, Italy 212592, International Association of Agricultural Economists.
    7. Yagi, Hironori & Hayashi, Tsuneo, 2021. "Working conditions and labor flexibility in non-family farms: weather-based labor management by Japanese paddy rice corporations," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(2), February.

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