Farmland Rental Rate and Marginal Return to Land: A French FADN Perspective
AbstractThe paper examines the relationship between the cash rent and the shadow value of farmland to understand the French farmland market. The empirical analysis is restricted to French main grain crops, namely wheat, oil crops and other grain crops. The sample is an unbalanced panel of 35,089 observations, that includes 6,089 crop farms which are observed about 5 years each, during the period 1990 -2007. The shadow values of all quasi-fixed assets have been derived from a restricted variable profit function. The profit function was successively estimated and tested by three estimation strategies: pooled OLS, one-way fixed effect and random panel model. However, concluding remarks are based on the results of the fixed effect model because of its statistical significance. The result indicates that the shadow prices of land and labour were persistently diverging from there observed price. The average shadow value of farmland was estimated about 550€/ha/year which is five times higher than the average rental price of 112€/ha/year over the studied period. Implication for the behaviours of French farmland market has been drawn from this analysis.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Agricultural Economics Society in its series 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK with number 134954.
Date of creation: Apr 2012
Date of revision:
Shadow values; cash rent; farmland price; NPV; restricted profit; fixed effect; Land Economics/Use; Q12; Q15;
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alfons Weersink & Steve Clark & Calum G. Turvey & Rakhal Sarker, 1999. "The Effect of Agricultural Policy on Farmland Values," Land Economics, University of Wisconsin Press, vol. 75(3), pages 425-439.
- Ashok Mishra & Charles Moss & Kenneth Erickson, 2004.
"Valuing farmland with multiple quasi-fixed inputs,"
Taylor and Francis Journals, vol. 36(15), pages 1669-1675.
- Mishra, Ashok K. & Erickson, Kenneth W. & Moss, Charles B., 2001. "Valuing Farmland With Multiple Quasifixed Inputs," Proceedings: 2001 Regional Committee NC-221, October 1-2, 2001, McLean, Virginia 132397, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
- Andrew J. Plantinga & Douglas J. Miller, 2001. "Agricultural Land Values and the Value of Rights to Future Land Development," Land Economics, University of Wisconsin Press, vol. 77(1), pages 56-67.
- Andersen, Trude B. & Roll, Kristin H. & Tveteras, Sigbjorn, 2008. "The Price Responsiveness of Salmon Supply in the Short and Long Run," Marine Resource Economics, Marine Resources Foundation, vol. 23(4).
- Lloyd, T A & Rayner, A J & Orme, C D, 1991. "Present-Value Models of Land Prices in England and Wales," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 18(2), pages 141-66.
- Maligaya, Arlyn R. & White, Fred C., 1989. "Agricultural Output Supply And Input Demand Relationships With Endogenous Land Rents," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 21(02), December.
- W. Erwin Diewert & T.J. Wales, 1989.
"Flexible Functional Forms and Global Curvature Conditions,"
NBER Technical Working Papers
0040, National Bureau of Economic Research, Inc.
- Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
- Falk, Barry L., 1991. "Formally Testing the Present Value Model of Farmland Prices," Staff General Research Papers 11093, Iowa State University, Department of Economics.
- Miranowski, John, 1993. "Understanding Farmland Price Changes," Staff General Research Papers 10696, Iowa State University, Department of Economics.
- Jean-Paul Chavas & Alban Thomas, 1999. "A Dynamic Analysis of Land Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 772-784.
- Lau, Lawrence J & Yotopoulos, Pan A, 1971. "A Test for Relative Efficiency and Application to Indian Agriculture," American Economic Review, American Economic Association, vol. 61(1), pages 94-109, March.
- Luciano Gutierrez & Joakim Westerlund & Kenneth Erickson, 2007. "Farmland prices, structural breaks and panel data," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 34(2), pages 161-179, June.
- Gao, Zhifeng & Featherstone, Allen M., 2008. "Estimating economies of scope using the profit function: A dual approach for the normalized quadratic profit function," Economics Letters, Elsevier, vol. 100(3), pages 418-421, September.
- Elodie Letort Author-X-Name- First: Elodie Author-X-Name- Last: Letort & Chalachew Temesgen, 2013. "Influence of environmental policies on farmland prices in the Bretagne region of France," Working Papers SMART - LERECO 201306, INRA UMR SMART.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.