Study on the functioning of land markets in the EU member states under the influence of measures applied under the Common Agricultural Policy. Study for France

Laure Latruffe, Yann Desjeux, Herve Guyomard (), Chantal Le Mouël and Laurent Piet ()
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Herve Guyomard: Laboratoire de Microbiologie - INRA - Institut National de la Recherche Agronomique - UB - Université de Bourgogne - ENSBANA - Ecole Nationale Supérieure de Biologie Appliquée à la Nutrition et à l'Alimentation de Dijon

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Abstract: The context of this study is the introduction of the Single Payment Scheme (SPS), pro-viding decoupled income support to farmers via the Single Farm Payment (SFP), as the central element of the June 2003 Common Agricultural Policy (CAP) reform. France has chosen to implement a historical model (SFP based on the reference period 2000-2002) with the highest possible partial coupling rates. The study aims at investigating how the SPS may influence land markets in France. One major issue is whether and to which de-gree the SPS has led to a capitalisation of agricultural support in land values, affecting both sales and rental prices of land; more specifically, the interest is how the capitalisa-tion into land values is different within the new CAP relative to the pre-2003 income support policy. Despite being strongly regulated, the agricultural land market in France has experienced a continuous increase in prices over the past 15 years, although prices are still far from their 80es level. While the capitalisation of subsidies in land prices is one aspect of the positive development of the prices, it is not ascertained that it is the major reason. Com-petition with non-agricultural uses is the main up-driver of agricultural land prices, and this pressure is expected to continue within the next years. Farmers' anticipations also play a role, and uncertainty regarding the policies may reduce the land market activity. Thus, there may be a decrease in the number of transactions in the next five years, due to the uncertainty surrounding the SFP after 2013. However, other factors may contribute to an increase of the transactions, such as agricultural prices and bio-fuels. Regarding the impact of the SFP itself on the agricultural land market, it is too early to have a clear idea about it, as it has been implemented in 2006 only, and thus later data than 2005 regarding agricultural or land statistics are in general unavailable or not reli-able. Based on qualitative information from experts, it seems that the main impact of the SPS has been to split agricultural land into two types of land: eligible and non-eligible, the latter being cheaper than the former; there is nevertheless no strong contribution of the SPS on the increase of eligible land's price, one reason being that entitlements are often traded with a whole farm and are likely included in the farm asset value.

Keywords: COMMON AGRICULTURAL POLICY; POLITIQUE AGRICOLE COMMUNE (search for similar items in EconPapers)
Date: 2008
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Published in [Contract] 2008

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