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An experimental analysis of German farmers’ decisions to buy or rent farmland

Author

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  • Danne, Michael
  • Buchholz, Matthias
  • Musshoff, Oliver

Abstract

Farmland is a principal production factor in agricultural production. Farmers have the opportunity to buy or to rent farmland. In this paper, we apply a discrete choice experiment (DCE) to analyze farmers’ individual buying and rental decisions for farmland. The net present value (NPV) is used as normative benchmark to evaluate farmers’ decisions in the experiment. Sociodemographic and business variables as well as farmers expectations about developments of farmland prices are used as covariates in the econometric analysis. Our results reveal that farmers have a higher willingness to buy than to rent farmland. Covariates as the farm size and the farmers risk attitude influence the farmers’ decisions in the DCE while no effect was observable for the individual expected purchase price change. Finally, we find that farmers act only in nearly the half of all decision in accordance with the NPV.

Suggested Citation

  • Danne, Michael & Buchholz, Matthias & Musshoff, Oliver, "undated". "An experimental analysis of German farmers’ decisions to buy or rent farmland," 165th Seminar, April 4-5, 2019, Berlin, Germany 288295, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa165:288295
    DOI: 10.22004/ag.econ.288295
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    Cited by:

    1. is not listed on IDEAS
    2. Min Zhou & Bing Kuang & Min Zhou & Nan Ke, 2022. "The Spatial and Temporal Evolution of the Coordination Degree in Regard to Farmland Transfer and Cultivated Land Green Utilization Efficiency in China," IJERPH, MDPI, vol. 19(16), pages 1-16, August.
    3. Dong, Changxing & Njiru, Ruth Dionisia Gicuku & Appel, Franziska, 2025. "Deep Reinforcement Learning in agent-based model AgriPoliS to simulate strategic land market interactions," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 83, pages 1-18.
    4. Baldoni, Edoardo & Ciaian, Pavel, 2023. "The capitalization of CAP subsidies into land prices in the EU," Land Use Policy, Elsevier, vol. 134(C).
    5. Jauernig, Johanna & Brosig, Stephan & Hüttel, Silke, 2023. "Profession and residency matter: Farmers' preferences for farmland price regulation in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 74(3), pages 816-834.
    6. Junnan Liu & Tong Chen & Yulan Song, 2022. "Coupling Coordination and Interactivity between Farmland Transfer and Rural Financial Development: Evidence from Western China," Sustainability, MDPI, vol. 14(24), pages 1-28, December.
    7. 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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    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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