Problem of capitalisation of subsidies in agriculture

Justyna Góral and Jacek Kulawik

No 240758, Problems of Agricultural Economics / Zagadnienia Ekonomiki Rolnej from Institute of Agricultural and Food Economics - National Research Institute (IAFE-NRI)

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.

Keywords: Agricultural and Food Policy; Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Pages: 21
Date: 2015
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:iafepa:240758

DOI: 10.22004/ag.econ.240758

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