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The factors influencing the profitability of leased land on dairy farms in Ireland

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  • Bradfield, Tracy
  • Butler, Robert
  • Dillon, Emma J.
  • Hennessy, Thia

Abstract

The Republic of Ireland possesses a land market that is constrained by minimal sales each year, less than 1%. In an effort to capitalise on milk quota abolition and to increase dairy production, a suite of tax incentives has recently been introduced in the Republic of Ireland to encourage land mobility and long-term leasing among Irish dairy farmers. Using Irish Farm Accountancy Database Network (FADN) data from 2011–2017 to examine this, a Heckman sample selection model explores two aspects; (i) the factors that influence a farmer’s decision to rent, or continue renting, land and (ii) the profitability of dairy farmers renting in land. We find self-selection into the rental market is driven by farm traits that include a high level of hired labour, the presence of a successor, intensive farming practices and dairy discussion group membership. The results show that rental agreements assist farms in achieving economies of scale. The findings provide evidence to support government intervention such as tax incentives for renting out land and knowledge sharing discussion groups.

Suggested Citation

  • Bradfield, Tracy & Butler, Robert & Dillon, Emma J. & Hennessy, Thia, 2020. "The factors influencing the profitability of leased land on dairy farms in Ireland," Land Use Policy, Elsevier, vol. 95(C).
    • Handle: RePEc:eee:lauspo:v:95:y:2020:i:c:s0264837719315340
    DOI: 10.1016/j.landusepol.2020.104649
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    Cited by:

    1. Onofri, Laura & Trestini, Samuele & Mamine, Fateh & Loughrey, Jason, 2022. "Understanding the Agricultural Land Leasing Market in Ireland: A Transaction Cost Approach," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321211, Agricultural Economics Society - AES.
    2. Bradfield, Tracy & Butler, Robert & Dillon, Emma J. & Hennessy, Thia & Loughrey, Jason, 2023. "The impact of long-term land leases on farm investment: Evidence from the Irish dairy sector," Land Use Policy, Elsevier, vol. 126(C).
    3. Adewale Henry Adenuga & Claire Jack & Ronan McCarry, 2023. "Investigating the Factors Influencing the Intention to Adopt Long-Term Land Leasing in Northern Ireland," Land, MDPI, vol. 12(3), pages 1-18, March.
    4. Silvia Russo & Rino Ghelfi & Meri Raggi & Davide Viaggi, 2024. "Factors Affecting the Land Investment Decisions in the Old Members of the European Union: A Systematic Literature Review," Land, MDPI, vol. 13(4), pages 1-18, April.
    5. Zeng Tang & Shiqi Guan & Menglin Zhao & Lijia Wang & Ying Liu & Yubing Fan, 2022. "Grassland Transfer and Its Income Effect: Evidence from Pastoral Areas of the Qinghai–Tibet Plateau," Land, MDPI, vol. 11(11), pages 1-20, November.
    6. Shin, Mika W. & Loughrey, Jason & Dillon, Emma & Geoghegan, Cathal, 2022. "Economic and Social Drivers of Farm Succession in Ireland," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321164, Agricultural Economics Society - AES.
    7. Adewale Henry Adenuga & Claire Jack & Ronan McCarry, 2021. "The Case for Long-Term Land Leasing: A Review of the Empirical Literature," Land, MDPI, vol. 10(3), pages 1-21, March.
    8. Otieno, David Jakinda, 2021. "Determinants of Rural Households’ Participation in Land Markets in Kenya," 2021 Conference, August 17-31, 2021, Virtual 315128, International Association of Agricultural Economists.
    9. Jingjing Sun & Jie Li & Yue Cui, 2024. "Does Non-Farm Employment Promote Farmland Abandonment of Resettled Households? Evidence from Shaanxi, China," Land, MDPI, vol. 13(2), pages 1-20, January.
    10. Bouali Guesmi & Ahmed Yangui & Ibtissem Taghouti & José Maria Gil, 2022. "Trade-Off between Land Use Pattern and Technical Efficiency Performance: Evidence from Arable Crop Farming in Tunisia," Land, MDPI, vol. 12(1), pages 1-13, December.
    11. Tracy Bradfield & Robert Butler & Emma Dillon & Thia Hennessy & Paul Kilgarriff, 2021. "The Effect of Land Fragmentation on the Technical Inefficiency of Dairy Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 486-499, June.

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