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Capitalization Of Government Support In Agricultural Land Prices: What Do We Know?

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  • Laure Latruffe
  • Chantal Le Mou�l

Abstract

The objective of this paper is to provide an overview of existing literature, both theoretically and empirically, on the extent to which agricultural subsidies do translate into higher land values and rents and finally benefit landowners instead of agricultural producers. Our review shows that agricultural support policy instruments contribute to increasing the rental price of farmland, and that the extent of this increase closely depends on the level of the supply price elasticity of farmland relative to those of other factors/inputs on the one hand, and on the range of the possibilities of factor/input substitution in agricultural production on the other hand. The empirical literature shows that land prices and rents have in general a significant positive and inelastic response to government support. Such inelastic response is thought to reflect the uncertain future of the farm programmes. And in general, studies have indicated that land prices are more responsive to government-based returns than to market-based returns. Copyright � 2009 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Economic Surveys.

Volume (Year): 23 (2009)
Issue (Month): 4 (09)
Pages: 659-691

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Handle: RePEc:bla:jecsur:v:23:y:2009:i:4:p:659-691

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Cited by:
  1. Bartolini, Fabio & Viaggi, Davide, 2011. "Factors Affecting the Impact of CAP Scenarios on Farm Structure: An Analysis Based on Stated Intentions," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114244, European Association of Agricultural Economists.
  2. Vranken, Liesbet & Van Herck, Kristine, 2013. "Direct Payments and Land Rents: Evidence from New Member States," Factor Markets Working Papers 175, Centre for European Policy Studies.
  3. Feichtinger, Paul & Salhofer, Paul, 2013. "A Spatial Analysis of Agricultural Land Prices in Bavaria," Factor Markets Working Papers 162, Centre for European Policy Studies.
  4. Latruffe , Laure & Minvie, Jean Joseph & Salanié, Julien, 2013. "The Role of Environmental and Land Transaction Regulations on Agricultural Land Price: The example of Brittany," Factor Markets Working Papers 164, Centre for European Policy Studies.
  5. Latruffe , Laure & Piet, Laurent & Dupraz, Pierre & Le Mouël, Chantal, 2013. "Influence of Agricultural Support on Sale Prices of French Farmland: A comparison of different subsidies, accounting for the role of environmental and land regulations," Factor Markets Working Papers 163, Centre for European Policy Studies.
  6. Viaggi, Davide & Bartolini, Fabio & Puddu, Marco & Raggi, Meri, 2013. "Farm/Household-level Simulation Results of Testing Policy and Other Scenarios," Factor Markets Working Papers 166, Centre for European Policy Studies.
  7. Latruffe , Laure & Ay, Jean-Sauveur, 2013. "The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices," Factor Markets Working Papers 165, Centre for European Policy Studies.
  8. Feichtinger, Paul & Salhofer, Klaus, 2013. "The Influence of the Common Agricultural Policy and Heterogeneous Land Quality on Land Rent and Land Allocation," Factor Markets Working Papers 149, Centre for European Policy Studies.
  9. Laure Latruffe & Laurent Piet & Pierre Dupraz & Chantal Le Mouel, 2013. "Influence of agricultural support on sale prices of french farmland: a comparison of different subsidies, accounting for the role of environmental and land regulations," Working Papers 209443, Institut National de la Recherche Agronomique, France.
  10. Viaggi, D. & Bartolini, F. & Puddu, M. & Raggi, M., 2013. "Impact of post-2013 CAP reform on land markets: evidence from farm surveys and farm-level modelling," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152375, International Agricultural Trade Research Consortium.
  11. Laure Latruffe & Jean Joseph Minviel & Julien Salanié, 2013. "The role of environmental and land transaction regulations on agricultural land price: The example of the French region Brittany," Working Papers SMART - LERECO 13-11, INRA UMR SMART.
  12. Laure Latruffe & Laurent Piet & Pierre Dupraz & Chantal Le Mouel, 2013. "The influence of agricultural support on sale prices of french farmland: a comparison of different subsidies, accounting for the role of environmental and land regulations," Working Papers 200148, Institut National de la Recherche Agronomique, France.
  13. Feichtinger, Paul & Salhofer, Klaus, 2011. "The Valuation of Agricultural Land and the Influence of Government Payments," Factor Markets Working Papers 112, Centre for European Policy Studies.
  14. Ifft, Jennifer & Nickerson, Cynthia J. & Kuethe, Todd H. & You, Chengxia, 2012. "Potential Farm-Level Effects of Eliminating Direct Payments," Economic Information Bulletin 139809, United States Department of Agriculture, Economic Research Service.
  15. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.

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