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The Dynamics of Farm Land Allocation – Short and Long Run Reactions in a Long Micro Panel

Søren Arnberg () and Lars Hansen ()
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Søren Arnberg: Danish Economic Counsils

No 2010/3, IFRO Working Paper from University of Copenhagen, Department of Food and Resource Economics

Abstract: This study develops a dynamic multi-output model of farmers’ crop allocation decisions that allows estimation of both short-run and long-run adjustments to a wide array of economic incentives. The method can be used to inform decision-makers about a number of issues including agricultural policy reform and environmental regulation. The model allows estimation of dynamic effects relating to price expectations adjustment, investment lags and crop rotation constraints. Estimation is based on micro-panel data from Danish farmers that includes acreage, output and variable input utilisation at the crop level. Results indicate that there are substantial differences between the shortrun and long-run land allocation behaviour of Danish farmers and that there are substantial differences in the time lags associated with different crops. Since similar farming conditions are found in northern Europe and parts of the USA and Canada, this result may have more general interest.

Keywords: land allocation; crop rotation; system of dynamic equations; micro panel data; GMM (search for similar items in EconPapers)
JEL-codes: C33 Q12 Q15 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2010-05
New Economics Papers: this item is included in nep-agr
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http://okonomi.foi.dk/workingpapers/WPpdf/WP2010/W ... _land_allocation.pdf (application/pdf)

Related works:
Working Paper: The Dynamics of Farm Land Allocation - Short and Long Run Reactions in Long Micro Panel (2007) Downloads
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