IDEAS home Printed from https://ideas.repec.org/p/ags/aesc22/320734.html
   My bibliography  Save this paper

Comparative analysis of revenue and land prices between organic and conventional farming

Author

Listed:
  • Veron, Emilien

Abstract

To satisfy the objectives of the European Green Deal, a quarter of the EU's agricultural land should be organic by 2030, compared to 8.5% today. France, the largest European country in terms of agricultural production, must become a major player in this transition. However, French farmers are hesitant to convert because of the uncertainty of whether organic farming will improve their income or not. We will conduct a double comparative analysis between the dierences in income (on 103,000 observations distributed between 2004 and 2019) and the dierences in the value of agricultural land (33,000 transactions between 2015 and 2019) between organic and conventional farmers. The study shows that the current monetary incentives for conversion are very low. Panel data modelling using the Breusch-Mizon-Schmidt estimator shows no dierence in income between organic and conventional farmers, despite higher subsidies and lower costs for organic farmers. Furthermore, using an OLS regression including Ricardian theory and residential rent determinants, it is demonstrated that organic land is sold for the same price as conventional land. This result is conrmed by the Spatial Matching method, showing that organic practice does not in uence the price of land. The article shows that it is necessary to consider whether the land is organic or not when selling agricultural land. Such dierentiation in the market can help to integrate environmental externalities (better soil quality) into the land value. This price increase could encourage land conversion through an anticipated increase in farmers' income. However, at present, the low supply of organic land for sale does not allow this price increase.

Suggested Citation

  • Veron, Emilien, 2022. "Comparative analysis of revenue and land prices between organic and conventional farming," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 320734, Agricultural Economics Society - AES.
    • Handle: RePEc:ags:aesc22:320734
    DOI: 10.22004/ag.econ.320734
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/320734/files/Emilien_Veron_AES_VERON_comparative_analysis_organic_farmer.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.320734?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Cyrus Grout & Jean Cavailhès & Cécile Détang-Dessendre & Alban Thomas, 2016. "Is Sprawling Residential Behavior Influenced by Climate?," Land Economics, University of Wisconsin Press, vol. 92(2), pages 203-219.
    2. Adrian Muller & Christian Schader & Nadia El-Hage Scialabba & Judith Brüggemann & Anne Isensee & Karl-Heinz Erb & Pete Smith & Peter Klocke & Florian Leiber & Matthias Stolze & Urs Niggli, 2017. "Strategies for feeding the world more sustainably with organic agriculture," Nature Communications, Nature, vol. 8(1), pages 1-13, December.
    3. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    4. Nguyen-Van, P. & Stenger, A. & Veron, E., 2021. "Spatial factors influencing the territorial gaps of organic farming in France," 95th Annual Conference, March 29-30, 2021, Warwick, UK (Hybrid) 311087, Agricultural Economics Society - AES.
    5. Mendelsohn, Robert & Nordhaus, William D & Shaw, Daigee, 1994. "The Impact of Global Warming on Agriculture: A Ricardian Analysis," American Economic Review, American Economic Association, vol. 84(4), pages 753-771, September.
    6. Jean Cavailhès & Pierre Wavresky, 2003. "Urban influences on periurban farmland prices [[L'influence urbaine sur le prix des terres périurbaines]]," Post-Print hal-02670737, HAL.
    7. Kate Binzen Fuller & Joseph P. Janzen & B. Munkhnasan, 2021. "Farmland Rental Rates: Does Organic Certification Matter?," Land Economics, University of Wisconsin Press, vol. 97(1), pages 80-106.
    8. Hausman, Jerry A & Taylor, William E, 1981. "Panel Data and Unobservable Individual Effects," Econometrica, Econometric Society, vol. 49(6), pages 1377-1398, November.
    9. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    10. Breusch, Trevor S & Mizon, Grayham E & Schmidt, Peter, 1989. "Efficient Estimation Using Panel Data," Econometrica, Econometric Society, vol. 57(3), pages 695-700, May.
    11. Jean CavailhËs & Pierre Wavresky, 2003. "Urban influences on periurban farmland prices," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(3), pages 333-357, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chakir, Raja & Lungarska, Anna, 2015. "Agricultural land rents in land use models: a spatial econometric analysis," 150th Seminar, October 22-23, 2015, Edinburgh, Scotland 212641, European Association of Agricultural Economists.
    2. Baltagi, Badi H., 2023. "The two-way Hausman and Taylor estimator," Economics Letters, Elsevier, vol. 228(C).
    3. Felix FitzRoy & Kornelius Kraft, 2005. "Co‐determination, Efficiency and Productivity," British Journal of Industrial Relations, London School of Economics, vol. 43(2), pages 233-247, June.
    4. Metcalf, Gilbert E., 1996. "Specification testing in panel data with instrumental variables," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 291-307.
    5. Jerry A. Hausman, 1996. "Valuation of New Goods under Perfect and Imperfect Competition," NBER Chapters, in: The Economics of New Goods, pages 207-248, National Bureau of Economic Research, Inc.
    6. Livanis, Grigorios T. & Moss, Charles B. & Breneman, Vincent E. & Nehring, Richard F., 2005. "Urban Sprawl and Farmland Prices," Working Papers 15657, University of Florida, International Agricultural Trade and Policy Center.
    7. Pia Nilsson & Sara Johansson, 2013. "Location determinants of agricultural land prices," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(1), pages 1-21, February.
    8. Lisi, Gaetano, 2010. "Occupazione irregolare e disoccupazione in Italia: un’analisi panel regionale [Underground Employment and Unemployment in Italy: A Panel Analysis]," MPRA Paper 22508, University Library of Munich, Germany.
    9. Kraft Kornelius & Ugarkovič Marija, 2006. "Gesetzliche Mitbestimmung und Kapitalrendite Co-Determination and Return on Equity / Co-Determination and Return on Equity," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 226(5), pages 588-604, October.
    10. Manuel Arellano & Olympia Bover, 1990. "La econometría de datos de panel," Investigaciones Economicas, Fundación SEPI, vol. 14(1), pages 3-45, January.
    11. Ahn, Seung C. & Low, Stuart, 1996. "A reformulation of the Hausman test for regression models with pooled cross-section-time-series data," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 309-319.
    12. Jalal El Ouardighi, 2005. "La spécialisation des activités technologiques des régions européennes : une approche empirique de la convergence," Discussion Papers (REL - Recherches Economiques de Louvain) 2005033, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    13. Pinka Chatterji & Dohyung Kim & Kajal Lahiri, 2014. "Birth Weight And Academic Achievement In Childhood," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1013-1035, September.
    14. Derek Hum & Wayne Simpson, 2002. "Analysis of the Performance of Immigrant Wages Using Panel Data," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 C2-1, International Conferences on Panel Data.
    15. repec:pst:wpaper:320 is not listed on IDEAS
    16. Jacob N. Arendt, 2002. "Endogeneity and Heterogeneity in LDV Panel Data Models," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 D6-1, International Conferences on Panel Data.
    17. R. Martinez-Espiñeira, 2002. "Residential Water Demand in the Northwest of Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 21(2), pages 161-187, February.
    18. Lisi, Gaetano, 2009. "Il lavoro irregolare in Italia: un'analisi panel regionale [Underground Employment in the Regions of Italy: A Panel Analysis]," MPRA Paper 18525, University Library of Munich, Germany.
    19. Hutchison, Michael M. & Noy, Ilan, 2006. "Sudden stops and the Mexican wave: Currency crises, capital flow reversals and output loss in emerging markets," Journal of Development Economics, Elsevier, vol. 79(1), pages 225-248, February.
    20. Hao Hao & Bai Huang & Tae-hwy Lee, 2024. "Model averaging estimation of panel data models with many instruments and boosting," Journal of Applied Statistics, Taylor & Francis Journals, vol. 51(1), pages 53-69, January.
    21. Yongcheol Shin & Laura Serlenga, 2007. "Gravity models of intra-EU trade: application of the CCEP-HT estimation in heterogeneous panels with unobserved common time-specific factors," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(2), pages 361-381.

    More about this item

    Keywords

    Agricultural and Food Policy; Farm Management; Land Economics/Use;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aesc22:320734. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aesukea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.