Search results

The purpose of this paper is to investigate the relationship between dairy farmland prices and farmland rental incomes in New Zealand from 1982 to 2009.

Using the net cash income received under a 50/50 share‐milking agreement to proxy the net cash rent, the paper attempts to explore the prices and rental incomes relationship using the present value model and then apply them in a pool regression model to show how farmers formulate their price bids.

Results show that over the long‐term dairy farmland price growth tends to be in line with rental growth. However, there is substantially higher growth in land prices in relation to the rental growth since 2002. Moreover, the risk premium placed by farmland owners on future rental cash flows since 2002 appears substantially below the historical average. The research further shows that farmers nowadays place more emphasis on the current season's payout than historical incomes in their price bids.

As a consequence the recent high land prices will be extremely sensitive to a permanent change to the low interest rate environment and future growth of dairy income. A policy recommendation is also highlighted.

The results of this paper indicates that the rapid price appreciation for New Zealand dairy farmland since 2000s might give rise to bubbles.

The chapter will document the Canadian reaction, as reflected in the demand of New Zealand, that Canada fundamentally alters its dairy supply management system in order to participate in the Trans-Pacific Partnership negotiations. The Canadian government has resolutely refused to do so, supported wholeheartedly by dairy farmers throughout the country. This is in part because of the effect such an action would have on rural spaces and the debilitating result it would have on Canadian dairy production. As well, the chapter will address the issue of the cost of dairy products in New Zealand as compared with Canada. Part of this analysis will focus on the role of supermarkets in determining the price structure of milk in both Canada and New Zealand. Finally, the chapter will offer an examination of the New Zealand system as represented by Fonterra and the Canadian system as epitomized by dairy supply management.

The objective of this chapter is to provide an approach to the farmland abandonment problem in Galicia, the Spain’s north-western region. We describe the land use pattern that characterized the traditional agricultural system, and analyze the process of structural adjustment and changes in land use recorded in the last 50 years. The empirical basis is provided mainly by an original elaboration of agricultural census data for the period 1982–2009. The results show that in the last five decades the area devoted to crops and pastures was constrained to a small portion of the territory (just over 20%), while the agro-livestock uses of hill land which were very important up to the mid-twentieth century disappeared. All this led to a remarkable expansion of abandoned land, which currently occupies at least 20% of the regional area. The drivers of this farmland abandonment are diverse and vary from one zone to another. But among them the conditioners derived from the structure of land ownership must be emphasized, coupled with the poor functioning of the land market and leasing. Land abandonment has had a major impact on the dynamics of the agricultural sector, limiting the size of farms and causing an increasing intensification in a small portion of the territory. This has also led to severe environmental problems, especially forest fires. Consequently, improving mobility and land use should be a priority of agricultural and rural development policies in this region.

Lease contracts at the time of sale influence buyers' expectations about future returns of farmland ownership and may thus contribute to price dispersion. This paper investigates the conjecture that existing land lease contracts influence buyers' and sellers' costs of being information deficient and thus their bargaining position, their expectation formation about future returns, and thus ultimately the farmland price.

The authors link different levels of information, search, and bargaining costs to three buyer types and their land use intentions. Relying on a rich dataset of farmland transactions in the German Federal State of Saxony-Anhalt from 2014 to 2019, the authors use a hedonic pricing model to investigate five hypotheses applying multivariate one-sided tests.

The authors find buyer-specific effects related to lease status and lease term of a lot. Tenant buyers pay less than non-farmer buyers for leased lots, whereas non-tenant farmers pay a markup. While prices decrease for all buyer groups with an increasing lease term, this effect is the strongest for non-tenant farmer buyers. This study’s results suggest that an existing lease contract impacts buyers' costs of being information deficient, their bargaining positions and expectation formation, and ultimately the price discovery process.

To the authors’ knowledge, this is the first study that decomposes the effects of tenancy on farmland prices by buyer type and lease term. The study provides insights into price dispersion for identical characteristics of farmland and explains why empirical studies have found mixed or no empirical evidence that lease contracts influence the price discovery process.

The purpose of this paper is to investigate the potential of eco-labels to help dairy farm viability as one partial solution to a complex problem. Specifically, it aims to understand which attributes are most likely to increase consumption and garner price premiums.

This paper uses key informant interviews and a convenience sample (n=203) of supermarket shoppers in Vermont. It uses Likert-type scales to measure the likelihood of increased purchase and paying price premiums based on a series attributes including animal welfare, fair labor standards, family farms and environmental stewardship. It calculates and compares mean ratings of each attribute and use an ordinal regression to measure the effect of demographic attributes on each attribute’s rating.

Interviewed stakeholders named low milk prices and evolving industry structure as harming dairy farm viability. They list supply control and improved promotion as potential solutions. Survey respondents say attributes supporting animal welfare, farm workers, family farms and healthy soil are most likely to garner increased consumption and price premiums.

The authors use a convenience sample, so generalization to larger populations is not advisable.

Promotion around animal welfare, farm workers, family farms and healthy soil is most likely to be effective, based on the results of this study. The survey responses are very highly correlated, suggesting that a multi-attribute eco-label may garner the most support.

This work can inform efforts to promote dairy farm viability, an important sector of the agricultural economy in Vermont and elsewhere in the USA.

This research provides the ranking of attributes which may appear on eco-labels by current consumers of dairy products in a state with an important dairy heritage and industry.

The paper examines the factors that influence the production of cash flows in a sample of Italian farm accountancy data network (FADN) farms to generate information useful for calibrating policies to support farmers' investments.

An econometric analysis on the sample estimates the influence of structural, economic, commercial and financial variables on CAFFE, i.e. the cash flow that includes the payments to the farmer's resources and the free cash flow on equity (FCFE). The econometric problem of endogeneity is treated by adopting the Hausman test to choose between fixed and random effects models. The results for Italian agriculture and its types of farming (TFs) are examined based on the FCFE/capital depreciation ratio, where FCFE subtracts from CAFFE the opportunity cost payments to the farmer's resources. This ratio identifies TFs with problems of sustainability of the production system.

The results show that increasing the productive dimension, in particular the endowment of farmland and working capital, is still essential to stimulate the production of cash flows of Italian agriculture. Without this growth, increasing the depreciable capital base is ineffective. FCFE does not compensate for depreciation in several TFs, which in various cases could also improve by improving economic efficiency and commercial position.

Assessing the factors that most influence cash flows can help to better calibrate rural development measures to the territories and farming types that most need public support. Our analysis procedure can be applied to all production systems equipped with farm accounting networks; however, the criteria for rewarding farmer resources and calculating the replacement value of agricultural capital need to be better discussed.

The specification of rural development policies rarely takes into account the financial sustainability conditions of farms, as well as the factors that determine them, in defining the support parameters and the selection criteria for funding. Our approach, based on the analysis of FADN data, considers these aspects and provides ideas for better calibrating public support for investments among agricultural territories, sectors and types of farms.

Estimates are developed of the major macroeconomic aggregates – wages, land rents, interest rates, prices, factor shares, sectoral shares in output and employment, and real wages – for England by decade between 1209 and 2008. The efficiency of the economy in the years 1209–2008 is also estimated. One finding is that the growth of real wages in the Industrial Revolution era and beyond was faster than the growth of output per person. Indeed until recently the greatest recipient of modern growth in England has been unskilled workers. The data also create a number of puzzles, the principal one being the very high levels of output and efficiency estimated for England in the medieval era. These data are thus inconsistent with the general notion that there was a period of Smithian growth between 1300 and 1800 which preceded the Industrial Revolution, as expressed in such recent works as De Vries (2008).

This chapter examines the involvement of finance companies in the purchasing and leasing of Australian farmlands. This is a new global phenomenon as, in past decades, finance companies have lent money to farmers, but have rarely sought to purchase land themselves. We investigate and discuss the activities of the Hancock company – an asset management firm that invested in farmland in northern NSW. Material on the activities of Hancock and other investment firms were obtained from documents on the public record, including newspaper reports. Semi-structured interviews with community members were conducted in the region of NSW where Hancock operated. Australian agriculture is being targeted for investment by companies in the finance industry – as part of a growing ‘financialization’ of farming. While it is financially beneficial for companies to invest, they do not do so in ‘empty spaces’ but in locations where people desire to live in a healthy environment. The Hancock company was criticized by community residents for failing to recognize the concerns of local people in pursuing its farming activities. To date, there have been few studies on the financialization of farming in Australia. By investigating the operations of the Hancock company we identify a number of concerns emerging, at the community level, about an overseas company running Australian-based farms.

Purpose – Dairy has been the backbone of agriculture in regional Norway, and the processing of milk has been dominated by co-operatives owned by milk farmers. During the social democratic order (1945–1979), productivist agriculture thrived, while a more multifunctional agriculture was developed after 1980. As a measure against overproduction, a quota system was introduced in 1983. The purpose of this study is to see if there are signs of a neo-productivism revival after climate change and other global shocks, like the food crisis, featured prominently on the political agenda.

Design/methodology/approach – The chapter reviews the radical structural changes in Norwegian dairy production since the early 1960s, which reduced the number of milk farms radically from 148,000 in 1959 to almost 16,000 in 2009. According to the Agricultural Agreement between the Norwegian government and the farmers' organisations, the co-operatives are given an important semi-public role as market-price regulators and stock keepers. This Norwegian system may be described as a classical regulated dairy regime. The Norwegian dairy regime has been through several deregulations and re-regulations over the last 20 years, partly forced by internal pressures and partly inspired by liberalisation tendencies abroad.

Findings – After mid-1990s, there has been an increase in the number of joint dairy farms, where individual ownership of land is maintained while herds, buildings and machinery are merged. Three thousand six hundred thirty dairy farmers are now participating in 1,510 joint farming firms, producing 29 per cent of the milk in Norway. This rapid growth of joint farming is transforming the dairy sector in Norway. Analysis has shown that its evolution is closely tied to farmer socio-economic demands, including social benefits, such as increased leisure time, and security during illness. While there has been pressure to increase productivity, the food crisis changed attitudes, making the current policy of import tariffs and subsidies easier to defend.

Originality/value – This chapter shows that neo-liberalism in Norway was not pursued as far as in most other OECD countries, although some deregulation was taking place. Norwegian agricultural policies are still regulating the sector to a substantial degree, with the annual Agricultural Agreement negotiations serving as a centrepiece. Norway has ambitious climate goals, and by 2020 greenhouse gases emissions should be reduced to 30 per cent of the 1990 rate. A further goal is that Norway will be carbon neutral by 2030. As part of the implementation of its climate policy, a White Paper on agriculture and climate change was put forward in May 2009. For Norwegian food production as a whole, a change towards more grazing at the expense of crops would improve carbon storage and reduce the overall use of fertiliser. Such a shift in land use would benefit the dairy sector, in part because of easier access to domestically grown cow feed.

The Capital Asset Pricing Model (CAPM) is used to estimate the cost of equity for each of 62 New York dairy farms that participated in a business analysis program from 1988 through 1997. The estimated betas were statistically less than one for all farms. Risk‐adjusted interest rates ranged from a high of 9.46 per cent to a low of 0.72 per cent, reflecting these low estimated betas.