Does land fragmentation affect farm performance? A case study from Brittany. Factor Markets Working Paper No. 40, April 2013

Agricultural land fragmentation is widespread and may affect farmers’ decisions and impact farm performance, either negatively or positively. The authors investigated this impact for the western region of Brittany, France, in 2007, regressing a set of performance indicators on a set of fragmentation descriptors. The performance indicators (production costs, yields, revenue, profitability, technical and scale efficiency) were calculated at the farm level using Farm Accountancy Data Network (FADN) data, while the fragmentation descriptors were calculated at the municipality level using data from the cartographic field pattern registry (RPG). The various fragmentation descriptors enabled the authors to account for not only the traditional number and average size of plots, but also their geographical scattering. They found that farms experienced higher costs of production, lower crop yields and lower profitability where land fragmentation (LF) was more pronounced. Total technical efficiency was not found to be significantly related to any of the municipality LF descriptors used, while scale efficiency was lower where the average distance to the nearest neighbouring plot was greater. Pure technical efficiency was found to be negatively related to the average number of plots in the municipality, with the unexpected result that it was also positively related to the average distance to the nearest neighbouring plot. By simulating the impact of hypothetical consolidation programmes on average pre-tax profits and wheat yield, the study also showed that the marginal benefits of reducing fragmentation may differ with respect to the improved LF dimension and the performance indicator considered. The analysis therefore shows that the measures of land fragmentation usually used in the literature do not reveal the full set of significant relationships with farm performance and that, in particular, measures accounting for distance should be considered more systematically.

Does it matter how much land your neighbour owns? The functioning of land markets in Poland from a social comparison perspective. Factor Markets Working Document No. 59, August 2013

While many factors have been studied in relation to the functioning of land markets, the role of land distribution has received relatively little attention. In this paper, we ask to what extent farmers’ propensity to buy land is related to the difference between them and their neighbours in terms of land ownership. To this end, we employ the concept of relative deprivation. Drawing on micro-level data from the transition period in Poland and using both OLS and instrumental variables strategy, we find that interpersonal comparisons with others in one’s reference group may have motivated a farmer’s behaviour in the land market. In particular, the propensity to purchase land is positively associated with experiencing higher relative deprivation. In addition, this relationship waned over time in a predictable manner: late in the transition period it was weaker than at the beginning of the period.

Direct Payments and Land Rents: Evidence from New Member States. Factor Markets Working Document No. 62, August 2013

This Factor Markets Working Paper analyses the impact of increasing direct payments on land rents in six new EU member states in which agricultural subsidies largely increased as a result of their EU accession. The authors find that up to 25 eurocents per additional euro of direct payments is capitalised in land rents. In addition, the results show that capitalisation of direct payments is higher in more credit constrained markets, while capitalisation of direct payments is lower in countries where more land is used by corporate farms.