Key Issues and Developments in Farmland Rental Markets in EU Member States and Candidate Countries. Factor Markets Working Paper No. 13, February 2012

In this paper, we describe recent developments in the rental market for agricultural land in selected EU member states and candidate countries. The analysis focuses on the importance of the rental market as well as on the evolution of rental prices. It appears that the share of rented land in the total utilised agricultural area varies considerably among member states. In the old member states, the share of rented land ranges between 18% in Ireland and 74% in France, while in the new member states (NMS) it ranges from 17% in Romania to 89% in Slovakia. For the former, different strategies to provide tenure security to tenants can explain differences in the importance of rental markets. Changes in the significance of land rental have also reflected changes in institutions and in economic and political conditions. In the NMS, diverse approaches to land reform have resulted in assorted ownership structures and hence in differences in the share of rented land. Regarding rental prices, governments impose price restrictions on agricultural land rents in some countries, such that large divergences are observed in rental prices between and within member states.

Rental Market Regulations for Agricultural Land in EU Member States and Candidate Countries. Factor Markets Working Paper No. 15, February 2012

In this paper, we describe the regulations governing the rental markets for agricultural land in selected EU member states and candidate countries. The analysis focuses on various kinds of regulations and institutions connected with the land rental market, including price, tenancy duration, quantity and other regulations, as well as transaction costs. The diverse government regulations on price restrictions and tenancy duration are analysed, along with the social norms observed for rental payments and contracts. The paper also examines the type and registration of contracts, the contract enforcement rules, the regulations on the inheritability of contracts and the pre-emptive right of tenants to buy the land.

An Analysis of the Capitalisation of CAP Payments into Land Rental Rates in Ireland. Factor Markets Working Document No. 68, August 2013

EDITED VERSION SOON TO BE PUBLISHED In this paper the effect of decoupling on the capitalisation of agricultural subsidies into agricultural rents in Ireland are analysed using a dynamic rental equations estimated with a two step system GMM estimator that accounts for expectation error and endogenous regressors. The findings illustrate the importance of institutional details in determining the extent to which subsidies are capitalised. In the period prior to decoupling Pillar 1 subsidies were highly capitalised into Irish agricultural rents in both the short and the long run. Depending on the farm system considered between 58 to 80 cents per euro of subsidies were capitalised into agricultural rents. In the post decoupling period the rate at which Pillar 1 subsidies are capitalised into Irish agricultural rents is found to have declined. This change is likely due to short term character of the Irish agricultural land rental market, where 11 month rental periods predominate, and the freedom that the 2003 reform of the CAP offered farmers to consolidate entitlements established on rented land. The generally very short term nature of Irish agricultural rental contracts offered farmers an opportunity to consolidate entitlements that is unlikely to have arisen in other Member States with agricultural land rental markets characterised by long term contracts. The results in both the pre and post decoupling periods highlight the high degree of inertia of agricultural rents in Ireland, and the importance of accounting for dynamics when investigating the capitalisation of agricultural subsidies into land rents. The high degree of inertia in rents means that the impact of previously capitalised agricultural policy persists through time.

Empirical Evidence of the Distributional Effects of the CAP in the New EU Member States. Factor Markets Working Document No. 58, August 2013

This study, carried out in the context of the Factor Markets research project, investigates the impact of the SAPS (Single Area Payment Scheme) on farmland rental rates in the new EU member states. Using a unique set of farm level panel data with 20,930 observations for 2004 and 2005 we are able to control for important sources of endogeneity. According to our results, the SAPS has a positive and statistically significant impact on land rents in the EU. However, the estimated incidence is smaller than predicted theoretically. Land rents capture only 19 cents of the marginal SAPS euro, and around 10% of the SAPS benefit non-farming landowners through higher farmland rental prices. As the share of rented land is higher in corporate farms than individual ones, family farms benefit more from the SAPS than corporate farms do.

Key Issues and Developments in Farmland Sales Markets in the EU Member States and Candidate Countries. Factor Markets Working Paper No. 12, February 2012

This paper describes recent developments in sales markets of agricultural land in selected member states of the European Union and its candidate countries. Analysis focuses on the importance of the sales market for agricultural land, the average size of transacted plots, and the evolution and magnitude of the land sales prices. The share of agricultural land sold on the market is relatively stable in most of the old member states, with the exception of Finland, the Netherlands and the UK, where a more dynamic market is observed. For the new member states, the sales market for agricultural land is strongly affected by public sales under the ongoing land privatisation programmes, while strong variation prevails in the private sales market. Substantial differences are also observed in both the average size of the transacted plots and the sales prices. For the latter, price regulations partially explain the heterogeneity in the evolution of sales prices.

Institutional Factors Affecting Agricultural Land Markets. Factor Markets Working Paper No. 16, February 2012

This paper analyses the main institutional factors affecting the rental and sales markets for agricultural land. Particular attention is paid to the effects of the common agricultural policy on land markets, and more specifically the underlying mechanism through which agricultural subsidies are capitalised into land values and farmland rents. This paper also provides a broad overview of the empirical studies that estimate the impact of agricultural support policies on land rents and land prices. Various other fundamental factors that affect agricultural land markets are discussed, such as land market institutions and regulations, transaction costs, credit market constraints and levels of profitability, the legal means of contract enforcement and land use alternatives.

The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices. Factor Markets Working Document No. 53, June 2013

After reviewing the Present Value Model (PVM), in its basic form and with its major extensions, the authors carried out a literature review on the instrumental uses of farm land prices; namely what land prices may reveal in the framework of the PVM. Urban influence, non-market goods and climate change are topics where the PVM used with applied data may reveal farmers’ or landowners’ beliefs or subjective values, which are discussed in this paper. There is also extensive discussion of the topic of public regulations, and how they may affect land price directly, or through its present value.

Pre-empting technical barriers in the Single Market. CEPS Policy Brief No. 277, 11 July 2012

Effective enforcement and compliance with EU law is not just a legal necessity, it is also of economic interest since the potential of the Single Market will be fully exploited. Enforcement barriers generate unjustified costs and hindrances or uncertainty for cross-border business and might deprive consumers from receiving the full benefit of greater choice and/or cheaper offers. The EU has developed several types of enforcement efforts (preventive initiatives, pre-infringement initiatives and formal infringement procedures). More recently, the emphasis has been placed on effective prevention. This CEPS Policy Brief analyses the functioning of one preventive mechanism (the 98/34 Directive) and assesses its potential to detect and prevent technical or other barriers in the course of the last 25 years. Based on an empirical approach, it shows that this amazing mechanism has successfully prevented thousands of new technical barriers from arising in the internal goods market.