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Direct Payments and Rent Extraction by Land Owners: Evidence from New Member States

  • Van Herck, Kristine
  • Vranken, Liesbet

Since the accession of the eight Central and Eastern European countries, farmers in these countries started to receive substantial agricultural subsidies. Agricultural subsidies alter farmer production incentives and thus factor demand and factor prices. Hence, agricultural support has an impact on land rents. This paper analyses the impact of the introduction of direct payments on land rents in the new member states and correlates econometrically land rental price data with support measures while controlling for other effects. The impact of direct payments on land rents is not only found to be statistically significant, but also economically important as 15% of the direct payments are capitalized in land rents in the new member states.

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File URL: http://purl.umn.edu/115543
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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 115543.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:115543
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