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Regional differences in the capitalisation of first and second pillar payments of the CAP into land rental prices

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  • Klaus Salhofer
  • Paul Feichtinger

Abstract

Nearly 80 per cent of Common Agricultural Policy (CAP) expenditures are spent on three different measures: first pillar payments (FPPs), agri-environmental payments (AEPs) and less favoured area payments (LFAPs). Based on a dynamic panel model and farm accounting data for Bavaria, we find that, on average, 30 per cent of FPPs, 40–50 per cent of LFAPs, but no relevant share of AEPs are capitalised into land rental prices. The capitalisation ratio varies considerably across regions. Above average capitalisation ratios for FPPs are observed in more favourable areas with high yields, a low grassland share and large farms. The same is true for LFAPs for areas with high yields, large farms and a greater share of part-time farmers.

Suggested Citation

  • Klaus Salhofer & Paul Feichtinger, 2021. "Regional differences in the capitalisation of first and second pillar payments of the CAP into land rental prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 48(1), pages 8-41.
    • Handle: RePEc:oup:erevae:v:48:y:2021:i:1:p:8-41.
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    File URL: http://hdl.handle.net/10.1093/erae/jbaa028
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    Cited by:

    1. Alper Demirdogen & Emine Olhan & Mehmet Hasdemir, 2022. "Heterogeneous impact of agricultural support policies: evidence from Turkey," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(10), pages 12203-12225, October.
    2. Lin, Wensheng & Huang, Jikun, 2021. "Impacts of agricultural incentive policies on land rental prices: New evidence from China," Food Policy, Elsevier, vol. 104(C).
    3. 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).
    4. Baldoni, Edoardo & Ciaian, Pavel, 2023. "The capitalization of CAP subsidies into land prices in the EU," Land Use Policy, Elsevier, vol. 134(C).
    5. Na Xu & Liqin Zhang & Xiyuan Leng, 2022. "Sustainable Food Production from a Labor Supply Perspective: Policies and Implications," Sustainability, MDPI, vol. 14(23), pages 1-19, November.
    6. Julia Stauder & Harald Meimberg & Monika Kriechbaum, 2023. "An Exploration of Drivers for Abandonment or Continuation of Summer Pasture Grazing in South Tyrol, Italy," Sustainability, MDPI, vol. 15(9), pages 1-17, April.

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