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The relations between the rent and price of agricultural land in the EU countries

Author

Listed:
  • František STŘELEČEK

    (Department Accounting and Finances, Faculty of Economics, University of South Bohemia, České Budějovice, Czech Republic)

  • Jana LOSOSOVÁ

    (Department Accounting and Finances, Faculty of Economics, University of South Bohemia, České Budějovice, Czech Republic)

  • Radek ZDENĚK

    (Department Accounting and Finances, Faculty of Economics, University of South Bohemia, České Budějovice, Czech Republic)

Abstract

The price of agricultural land and its value are of importance when forming the production potential of agricultural enterprises. The price of land marked an irregular development in the period 2006-2007 having increased in the majority of the EU states. The proportion of rent to the market price of land referred to as the capitalization rate kept varying within the range of 2-3%. The price of a site should, besides the land rent, also reflect the interest on the land rent received. The price of agricultural land with respect to the land rent manifests relatively important price inertia. This inertia in connection with a high growth rate of land rent results in the unrealistically high interest rate. Such situation is an evident advantage for land owners and is, on the contrary, a disadvantage for the tenants of the agricultural land. To make the interest rate realistic means especially stabilizing the land rent with low growth rates. These growth rates are different for different states. In general it can be maintained that the relative increase in land rent should not surpass 4%, exceptionally 6%.

Suggested Citation

  • František STŘELEČEK & Jana LOSOSOVÁ & Radek ZDENĚK, 2010. "The relations between the rent and price of agricultural land in the EU countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 56(12), pages 558-568.
    • Handle: RePEc:caa:jnlage:v:56:y:2010:i:12:id:130-2010-agricecon
    DOI: 10.17221/130/2010-AGRICECON
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    1. J.P. Boinon & J.C. Kroll & D. Lepicier & A. Leseigneur & J.B. Viallon, 2007. "Enforcement of the 2003 CAP reform in 5 countries of the West European Union: Consequences on land rent and land market," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 53(4), pages 173-183.
    2. Haixiao Huang & Gay Y. Miller & Bruce J. Sherrick & Miguel I. Gómez, 2006. "Factors Influencing Illinois Farmland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 458-470.
    3. Patton, Myles & Kostov, Philip & McErlean, Seamus & Moss, Joan, 2008. "Assessing the influence of direct payments on the rental value of agricultural land," Food Policy, Elsevier, vol. 33(5), pages 397-405, October.
    4. E. Hamza & K. Miskó, 2007. "Characteristics of land market in Hungary at the time of the EU accession," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 53(4), pages 161-168.
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