Determinants of Agricultural Cash Rents in Germany: A Spatial Econometric Analysis for Farm-Level Data
AbstractThis article analyses determinants for 2001 farmland rental prices from 4376 farms in Germany. We derive our regression equation from a spatial reaction function to allow for spatial transmission of rental prices. Results from a general spatial model show that a € 1 per hectare higher rental price in a farmer’s neighbourhood coincides with a € 0.57 higher rental price he has to pay. For policy evaluation we estimate the marginal incidence of regional EU per-hectare premiums. We find a value significantly above one and propose an explanation for this counterintuitive result based on the long-running nature of rental contracts, simultaneity of premium introduction and intervention price cuts as well as assumed stickiness of rental prices. Regional livestock density, which is indirectly influenced by different policies, is also a major determinant of rental prices.
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Bibliographic InfoPaper provided by International Association of Agricultural Economists in its series 2009 Conference, August 16-22, 2009, Beijing, China with number 51685.
Date of creation: 2009
Date of revision:
farmland rental price; per-hectare premium; spatial econometrics; subsidy incidence; Farm Management; Land Economics/Use; Political Economy;
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