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The capitalization of coupled and decoupled CAP payments into land rental rates

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  • Stephen O'Neill
  • Kevin Hanrahan

Abstract

This article explores the extent to which payments under the Common Agricultural Policy (CAP) are capitalized into land rents in Ireland with implications for the transfer efficiency of such payments, since subsidies may not benefit targeted recipients if they are capitalized into input prices. Capitalization in the years preceding and following the "decoupling" of agricultural support payments from agricultural production is explored. In the period prior to decoupling, direct support (Pillar 1) payments were highly capitalized into Irish agricultural rents (67–90 cents per euro of subsidies), while in the post-decoupling period capitalization appears to have declined somewhat.

Suggested Citation

  • Stephen O'Neill & Kevin Hanrahan, 2016. "The capitalization of coupled and decoupled CAP payments into land rental rates," Agricultural Economics, International Association of Agricultural Economists, vol. 47(3), pages 285-294, May.
  • Handle: RePEc:bla:agecon:v:47:y:2016:i:3:p:285-294
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    Cited by:

    1. Wensheng Lin & Rongyuan Chen, 2021. "The Capitalization Effect and Its Consequence of Agricultural Support Policies—Based on the Evidence of 800 Villages in China," Sustainability, MDPI, vol. 13(14), pages 1-13, July.
    2. Pavel Ciaian & d'Artis Kancs & Maria Espinosa, 2018. "The Impact of the 2013 CAP Reform on the Decoupled Payments’ Capitalisation into Land Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 306-337, June.
    3. Matthews, Alan & Salvatici, Luca & Scoppola, Margherita, 2017. "Trade Impacts of Agricultural Support in the EU," Commissioned Papers 252767, International Agricultural Trade Research Consortium.
    4. Ciaian, Pavel & Espinosa, Maria & Louhichi, Kamel & Perni, Angel & Gomez y Paloma, Sergio, 2018. "Farm level impacts of abolishing the CAP direct payments: An assessment using the IFM-CAP model," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 272087, European Association of Agricultural Economists.
    5. Xin, Liangjie & Li, Xiubin, 2019. "Rental rates of grain land for consolidated plots and their determinants in present-day China," Land Use Policy, Elsevier, vol. 86(C), pages 421-426.
    6. Wu, Ziping & Pei, Pei, 2018. "Potential Impacts of Changes in Single Farm Payment (SFP) on Rural Economy in Northern Ireland (NI)," 162nd Seminar, April 26-27, 2018, Budapest, Hungary 272089, European Association of Agricultural Economists.
    7. Antonio Alberto Rodríguez Sousa & Jesús M. Barandica & Pedro A. Aguilera & Alejandro J. Rescia, 2020. "Examining Potential Environmental Consequences of Climate Change and Other Driving Forces on the Sustainability of Spanish Olive Groves under a Socio-Ecological Approach," Agriculture, MDPI, vol. 10(11), pages 1-22, October.
    8. Pavel Ciaian & Edoardo Baldoni & d'Artis Kancs & Dušan Drabik, 2021. "The Capitalization of Agricultural Subsidies into Land Prices," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 17-38, October.
    9. Hennig Solveigh & Breustedt Gunnar, 2018. "The Incidence of Agricultural Subsidies on Rental Rates for Grassland," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 238(2), pages 125-156, April.
    10. Kehinde Oluseyi Olagunju & Myles Patton & Siyi Feng, 2020. "Estimating the Impact of Decoupled Payments on Farm Production in Northern Ireland: An Instrumental Variable Fixed Effect Approach," Sustainability, MDPI, vol. 12(8), pages 1-17, April.
    11. Milczarek-Andrzejewska, Dominika & Zawalińska, Katarzyna & Czarnecki, Adam, 2018. "Land-use conflicts and the Common Agricultural Policy: Evidence from Poland," Land Use Policy, Elsevier, vol. 73(C), pages 423-433.
    12. Di Corato, Luca & Brady, Mark V., 2019. "Passive farming and land development: A real options approach," Land Use Policy, Elsevier, vol. 80(C), pages 32-46.
    13. Marten Graubner, 2018. "Lost in space? The effect of direct payments on land rental prices," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 45(2), pages 143-171.
    14. Biagini Luigi & Simone Severini, 2021. "The role of Common Agricultural Policy (CAP) in enhancing and stabilising farm income: an analysis of income transfer efficiency and the Income Stabilisation Tool," Papers 2104.14188, arXiv.org.
    15. Luigi Biagini & Federico Antonioli & Simone Severini, 2020. "The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 652-675, September.
    16. Cord-Friedrich von Hobe & Marius Michels & Oliver Musshoff, 2021. "German Farmers’ Perspectives on Price Drivers in Agricultural Land Rental Markets—A Combination of a Systematic Literature Review and Survey Results," Land, MDPI, vol. 10(2), pages 1-22, February.

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