Farmland rental rate and marginal return to land: A french FADN perspective

Pierre Dupraz and Chalachew Temesgen Jemberie
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Chalachew Temesgen Jemberie: SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST

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Abstract: The paper examines the relationship between the cash rent and the shadow value of farmland to understand the French farmland market. The empirical analysis is restricted to French main grain crops, namely wheat, oil crops and other grain crops. The sample is an unbalanced panel of 35,089 observations, that includes 6,089 crop farms which are observed about 5 years each, during the period 1990 -2007. The shadow values of all quasi-fixed assets have been derived from a restricted variable profit function. The profit function was successively estimated and tested by three estimation strategies: pooled OLS, one-way fixed effect and random panel model. However, concluding remarks are based on the results of the fixed effect model because of its statistical significance. The result indicates that the shadow prices of land and labour were persistently diverging from there observed price. The average shadow value of farmland was estimated about 550€/ha/year which is five times higher than the average rental price of 112€/ha/year over the studied period. Implication for the behaviours of French farmland market has been drawn from this analysis.

Keywords: Shadow values; cash rent; farmland price; net present value; restricted profit; fixed effect (search for similar items in EconPapers)
Date: 2012-04-16
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Citations: View citations in EconPapers (2)

Published in 86. Annual Conference of the Agricultural Economics Society (AES), Agricultural Economics Society (AES). GBR., Apr 2012, Warwick, United Kingdom. 21 p

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Working Paper: Farmland Rental Rate and Marginal Return to Land: A French FADN Perspective (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01208927

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