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How has the 2013 decoupled payment reform affected farmland rental values in Northern Ireland?

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  • Olagunju, Kehinde Oluseyi
  • Angioloni, Simone
  • Wu, Ziping

Abstract

The degree of capitalisation of agricultural subsidies into land rents has been mainly determined by different payment implementation systems and land markets. The 2013 EU Common Agricultural Policy (CAP) reform introduces a transition of Single Farm Payment towards a flat rate system and entitlement reallocation. Based on 2009–2017 Farm Business Survey data, we used the Arellano-Bond dynamic panel data estimation technique to estimate the capitalisation impact of the 2013 CAP reform to decoupled payments (DP) in Northern Ireland (NI) where a short term conacre land rental system is dominant. Our estimates suggest that under the 2013 CAP reform in NI, the capitalisation of DP into land rental prices has continued even when entitlements are less than eligible land areas. Specifically, the marginal effect on rental rates of an additional pound of the DP is 22 pence, increasing to 43 pence following the 2013 CAP reform but only in the first year. Given that about one-third of land area is rented in NI, land capitalisation will be of particular relevance in designing more efficient future subsidy policies.

Suggested Citation

  • Olagunju, Kehinde Oluseyi & Angioloni, Simone & Wu, Ziping, 2022. "How has the 2013 decoupled payment reform affected farmland rental values in Northern Ireland?," Land Use Policy, Elsevier, vol. 112(C).
    • Handle: RePEc:eee:lauspo:v:112:y:2022:i:c:s0264837721005524
    DOI: 10.1016/j.landusepol.2021.105829
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    More about this item

    Keywords

    Land market; CAP reform; Land rents; Dynamic GMM;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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