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Problem of capitalisation of subsidies in agriculture

Author

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  • Góral, Justyna
  • Kulawik, Jacek

Abstract

The capitalisation of the subsidies is a process of depositing them in the rental rates, prices of farmland and values of farm’s assets. For example, the capitalisation of direct payments is the part of rent increase due to the introduction of these payments. Generally, it is evaluated as a negative impact, which may be in conflict with the improvement of competitiveness of farms. The capitalisation of support is a major source of inefficiency of direct transfers to agriculture, particularly those designed to improve the income situation of farmers. Empirical studies differ as to the level of capitalisation, its mechanisms, dynamics and conditions. To sum up the foregoing and the results of previous studies, it is clear that the capitalisation of subsidies in agriculture is a fact. Its source, nature, intensity and consequences are conditioned in many ways.

Suggested Citation

  • Góral, Justyna & Kulawik, Jacek, 2015. "Problem of capitalisation of subsidies in agriculture," Problems of Agricultural Economics 240758, Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI).
  • Handle: RePEc:ags:iafepa:240758
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    File URL: http://ageconsearch.umn.edu/record/240758/files/Kulawik_%20G_ral.pdf
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    References listed on IDEAS

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    1. Jerzy Michalek & Pavel Ciaian & d’Artis Kancs, 2014. "Capitalization of the Single Payment Scheme into Land Value: Generalized Propensity Score Evidence from the European Union," Land Economics, University of Wisconsin Press, vol. 90(2), pages 260-289.
    2. Brian C. Briggeman & Michael A. Gunderson & Brent A. Gloy, 2009. "The Financial Health of Agricultural Lenders," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1406-1413.
    3. Ciaian, Pavel & Pokrivcak, Jan & Kancs, d'Artis, 2013. "Empirical Evidence of the Distributional Effects of the CAP in New EU Member States," Working papers 157117, Factor Markets, Centre for European Policy Studies.
    4. Pavel Ciaian & d’Artis Kancs & Johan Swinnen, 2010. "EU Land Markets and the Common Agricultural Policy," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 53(3), pages 1-31.
    5. Gunnar Breustedt & Hendrik Habermann, 2011. "The Incidence of EU Per‐Hectare Payments on Farmland Rental Rates: A Spatial Econometric Analysis of German Farm‐Level Data," Journal of Agricultural Economics, Wiley Blackwell, vol. 62(1), pages 225-243, February.
    6. Briggeman, Brian C. & Gunderson, Michael A. & Gloy, Brent A., 2009. "AJAE appendix for “The Financial Health of Agricultural Lenders”," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 91(5), pages 1-7, August.
    7. Carlberg, Jared G., 2002. "Effects Of Ownership Restrictions On Farmland Values In Saskatchewan," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(2), pages 1-10, August.
    8. Charles H. Barnard & Gerald Whittaker & David Westenbarger & Mary Ahearn, 1997. "Evidence of Capitalization of Direct Government Payments into U.S. Cropland Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1642-1650.
    9. Carlberg, Jared G., 2002. "Effects of Ownership Restrictions on Farmland Values in Saskatchewan," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 34(02), pages 349-358, August.
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