Factor markets are a central issue in the analyses of the farm development and of the agricultural sector vitality. Among the different production factors, land is one of the most studied. Several works aim to estimate the effect of policy payments on the capitalization into land value or land rental prices. Others (often ex-post analyses) address the effects of changes in policy mechanisms or property rights system on the amount of land markets transactions. Other studies, mainly ex-ante analyses, focus on the effect of different policy scenario on the changes of the land demand or land rented/sold often derived or expressed by changes in marginal value of the lands. The studies mostly agree that government payments and other types of policy support are significant in explaining land prices and account for a large share of it. Recently, the EU Commission has published the new policy proposal for the CAP towards 2020. The mechanism of payment will be based on a disentangling of the single farm payment (SFP) into four different payments: basic payments; greening component; payments to the less favored area and payments to young and small farms. The same regulation proposals include the proposal to switch the payment regime from historical to regional bases. The objective of this contribution is to provide an ex-ante analysis of the impact of the new CAP policy instruments on the land market. In particular the effect of the new regionalization of payments will be analyzed. The analysis is based on an application of mathematical programming model in a representative farm in Emilia Romagna (Italy). Results highlight the relevance of the new policy mechanism in determining a change in land demand. In particular, the introduction of the regionalized payments and the new rules concerning the loss of connection with the reference three-year period (2000-2002) and the titles owns, will affect directly and more than other policy components the marginal value of land and hence land demand.

The effects of the new CAP reform on the land market: an analysis in Emilia Romagna

BARTOLINI, FABIO;
2012-01-01

Abstract

Factor markets are a central issue in the analyses of the farm development and of the agricultural sector vitality. Among the different production factors, land is one of the most studied. Several works aim to estimate the effect of policy payments on the capitalization into land value or land rental prices. Others (often ex-post analyses) address the effects of changes in policy mechanisms or property rights system on the amount of land markets transactions. Other studies, mainly ex-ante analyses, focus on the effect of different policy scenario on the changes of the land demand or land rented/sold often derived or expressed by changes in marginal value of the lands. The studies mostly agree that government payments and other types of policy support are significant in explaining land prices and account for a large share of it. Recently, the EU Commission has published the new policy proposal for the CAP towards 2020. The mechanism of payment will be based on a disentangling of the single farm payment (SFP) into four different payments: basic payments; greening component; payments to the less favored area and payments to young and small farms. The same regulation proposals include the proposal to switch the payment regime from historical to regional bases. The objective of this contribution is to provide an ex-ante analysis of the impact of the new CAP policy instruments on the land market. In particular the effect of the new regionalization of payments will be analyzed. The analysis is based on an application of mathematical programming model in a representative farm in Emilia Romagna (Italy). Results highlight the relevance of the new policy mechanism in determining a change in land demand. In particular, the introduction of the regionalized payments and the new rules concerning the loss of connection with the reference three-year period (2000-2002) and the titles owns, will affect directly and more than other policy components the marginal value of land and hence land demand.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11568/241389
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