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Article
Publication date: 29 April 2021

Yuan-pei Kuang, Jia-li Yang and Meseret-Chanie Abate

The multidimensional effects of farmland transfer in China have been profoundly unstudied. The purpose of this paper is to provide insights on the effects of the…

Abstract

Purpose

The multidimensional effects of farmland transfer in China have been profoundly unstudied. The purpose of this paper is to provide insights on the effects of the intermediary role of agricultural total factor productivity (TFP) of farmland transfer on agricultural economic growth in China.

Design/methodology/approach

Based on the agricultural data of 30 provinces in China over the period 2005–2018, this paper uses the intermediary effect model to test the relationship between farmland transfer, agricultural TFP and agricultural economic growth. This paper employed an intermediary effect test model to investigate the intermediary role of agricultural TFP in the influence of farmland transfer on agricultural economic growth.

Findings

The findings indicated that farmland transfer has a significant effect on promoting agricultural economic growth. There is a significant “inverted U-shaped” relationship between farmland transfer and agricultural TFP. The sample value of 84.3% of farmland transfers in China is still within the TFP promoting effect range. In addition, farmland transfer has an indirect impact on agricultural economic growth through the channel of agricultural TFP. Agricultural TFP plays a significant intermediary role, but the effect is relatively low

Originality/value

This paper is the first to provide fundamental evidence on the impact of farmland transfers on agricultural economic growth in China, driven by agricultural TFP as an intermediary factor. Agricultural TFP can reduce the involution effect of farmland transfer and promote an indirect effect on agricultural economic growth.

Details

China Agricultural Economic Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 8 February 2021

Albulena Basha, Wendong Zhang and Chad Hart

This paper quantifies the effects of recent Federal Reserve interest rate changes, specifically recent hikes and cuts in the federal funds rate since 2015, on Midwest…

Abstract

Purpose

This paper quantifies the effects of recent Federal Reserve interest rate changes, specifically recent hikes and cuts in the federal funds rate since 2015, on Midwest farmland values.

Design/methodology/approach

The authors apply three autoregressive distributed lag (ARDL) models to a panel data of state-level farmland values from 1963 to 2018 to estimate the dynamic effects of interest rate changes on the US farmland market. We focus on the I-states, Lakes states and Great Plains states. The models in the study capture both short-term and long-term impacts of policy changes on land values.

Findings

The authors find that changes in the federal funds rate have long-lasting impacts on farmland values, as it takes at least a decade for the full effects of an interest rate change to be capitalized in farmland values. The results show that the three recent federal funds rate cuts in 2019 were not sufficient to offset the downward pressures from the 2015–2018 interest rate hikes, but the 2020 cut is. The combined effect of the Federal Reserve's recent interest rate moves on farmland values will be positive for some time starting in 2022.

Originality/value

This paper provides the first empirical quantification of the immediate and long-run impacts of recent Federal Reserve interest rate moves on farmland values. The authors demonstrate the long-lasting repercussions of Federal Reserve's policy choices in the farmland market.

Details

Agricultural Finance Review, vol. 81 no. 5
Type: Research Article
ISSN: 0002-1466

Keywords

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Article
Publication date: 8 May 2018

Ying Liu, Chenggang Wang, Zeng Tang and Zhibiao Nan

The purpose of this paper is to examine the impacts of farmland renting-in on planted grain acreage.

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Abstract

Purpose

The purpose of this paper is to examine the impacts of farmland renting-in on planted grain acreage.

Design/methodology/approach

A survey data of five counties were analyzed with the two-stage ordinary least squares model.

Findings

Households renting-in land trended to plant more maize, and the more land was rented by a household the more maize was planted, while wheat acreage showed non-response to farmland renting-in.

Practical implications

Overall, the analysis suggests that policy makers should be prepared for different changing trends of grain crop acreage across the nation as farmland transfer continues. Future research should pay attention to the effect of farmland transfer on agricultural productivity and rural household income growth.

Originality/value

As the Chinese Government is promoting larger-scale and more mechanized farms as a way of protecting grain security, it is important to understand whether farmland renting-in will reduce planted grain acreage. This study provides empirical evidence showing the answer to that question may differ across different regions and depend on the particular grain crop in question.

Details

China Agricultural Economic Review, vol. 10 no. 2
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 25 September 2019

Tongwei Qiu, Biliang Luo, Shangpu Li and Qinying He

The purpose of this paper is to assess the links between basic farmland preservation and land transfers in rural China.

Abstract

Purpose

The purpose of this paper is to assess the links between basic farmland preservation and land transfers in rural China.

Design/methodology/approach

The Chinese provincial panel data from 2006 to 2016 were analyzed with the use of Arellano–Bond linear dynamic panel data estimations.

Findings

The basic farmland preservation policy negatively affects the land transfer rate. In addition, this policy is most likely to limit land transfers between local acquaintances in the major grain-producing areas. Further evidence indicates that the basic farmland preservation policy has a negative impact on land rentals in general. Considering that land transfers such as exchanges and take-overs are excluded from rental transactions between acquaintances, the policy’s constraints on land use are likely to hinder land rentals between acquaintances, which are market-oriented.

Practical implications

Overall, this study’s analysis suggests that the farmland preservation policy’s constraints on land use rights are likely to result in a major diminishment of the rural rental markets. Under this policy, land that is designated as basic farmland cannot be converted to another use. However, it remains possible to improve the productivity of agriculture through other means. These possible avenues for improvement include enhancing the efficiency of production through expanding the scale of farming operations and developing the social services aspect of agriculture (i.e. the basic farmland preservation policy is likely to realize more social revenue than can be gained from land transfers). Thus, the arrangement of the basic farmland preservation policy in China can be managed in a way that is both economical and reasonable.

Originality/value

To ensure food security, China has enacted several laws and regulations to preserve basic farmland, and it has promoted land transfers to improve farm productivity. Therefore, it is important to understand whether the basic farmland preservation policy restricts land use rights and hinders land transfers that could improve productivity. This study provides empirical evidence showing that the basic farmland preservation policy is actually not conducive to promoting land transfers and that it even discourages the market orientation of land rentals between acquaintances. In dealing with this issue, the Chinese Government should seek to balance the relationship between preserving basic farmland and promoting land transfers.

Details

China Agricultural Economic Review, vol. 12 no. 1
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 17 October 2018

Li Huang and Rong Tan

The purpose of this paper is to explore the causality between social security policies and farmland reallocation in rural China.

Abstract

Purpose

The purpose of this paper is to explore the causality between social security policies and farmland reallocation in rural China.

Design/methodology/approach

It quantitatively analyzes the impact of each ongoing social security policy on farmland reallocation based on a data set from the 2011 China Health and Retirement Longitudinal Study (CHARLS, 2011).

Findings

The study finds that the inclination of a village farmers’ collective to reallocate farmland due to changes in the village population increased if social security policies do not effectively cover the village because farmers rely primarily on income from farmland to cover their basic living expenses. However, if social security policies provide adequate coverage, then farmers do not rely entirely on on-farm income and the likelihood of farmland reallocation decreases. Furthermore, the effectiveness of social security policies includes not only coverage but also the sufficiency of the security policies provided.

Research limitations/implications

First, the authors use only cross-sectional data in this study, which may result in biased estimation and also limit temporal examination of the impact of social security systems, farmland reallocation and related policy variables. This limitation may be especially important in China because the country is undergoing a rapid socioeconomic transition. However, the research is constrained by the available data. Furthermore, there could be endogeneity problems that are difficult to address, given the current data set. These problems could involve the impacts of village-level economic, natural and social variables, the implementation of related public policies (land development and consolidation, land expropriation, etc.) and other economic variables.

Practical implications

These findings may provide implications for related policy reform in the near future.

Originality/value

These findings may facilitate a recognition and understanding of the causality between social security policies and farmland reallocation in rural China.

Details

China Agricultural Economic Review, vol. 10 no. 4
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 8 May 2018

Weiliang Su, Tor Eriksson and Linxiu Zhang

The purpose of this paper is to examine the impact of off-farm employment on the concentration of farmland via households’ land rental activities in rural China.

Abstract

Purpose

The purpose of this paper is to examine the impact of off-farm employment on the concentration of farmland via households’ land rental activities in rural China.

Design/methodology/approach

The paper uses Probit and Tobit models to estimate the effect of off-farm employment on land rental activities. Furthermore, the paper compares the degree of land concentration between pre-renting and post-renting in terms of Gini coefficients of farmland ownership at village level.

Findings

The authors find that off-farm employment has a positive effect on the renting out farmland, and insignificant effect on renting in farmland. Moreover, off-farm employment intensifies the concentration of farmland from small farms toward big farms by renting activities.

Originality/value

The authors believe that the results will contribute positively to the assessment of the effect of off-farm employment on land concentration in the context of the urbanization process in China.

Details

China Agricultural Economic Review, vol. 10 no. 2
Type: Research Article
ISSN: 1756-137X

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Article
Publication date: 3 May 2013

Bruce J. Sherrick, Mindy L. Mallory and Timothy Hopper

Relatively high recent returns to farmland investments have led to substantially elevated interest in farmland investments. Absent, however, is a well‐functioning equity…

Abstract

Purpose

Relatively high recent returns to farmland investments have led to substantially elevated interest in farmland investments. Absent, however, is a well‐functioning equity market in farmland real estate, or well‐developed indexes of farmland returns that might contribute to the development of tradable shares tied to farmland returns, or to methods to hedge the value of owned agricultural assets. The purpose of this study is to empirically present relevant measures related to farmland returns and other financial assets to provide a broad context for evaluation of farmland investments in a portfolio context. Issues related to the development of a farmland fund and index construction are discussed along with major risk and transactional factors that are somewhat unique to the asset class.

Design/methodology/approach

Returns data from a broad set of financial categories and broad set of agricultural returns measures are developed and presented in multiple frameworks to convey temporal persistence, relatedness, and portfolio considerations related to farmland. Issues related to the construction of claims based on agricultural assets are discussed.

Findings

Agricultural real estate investments have performed well compared to most other financial assets on most traditional measures of risk adjusted performance. However, the difficulties in direct investment remain and the need to develop securitized conduit exposures to farmland returns is identified.

Originality/value

The study presents a unique set of farmland returns measures and examines the stability of the statistics used to describe these through time. Novel characterizations of the data compared to traditional assets helps investors and asset owners accurately understand the exposure to farmland returns.

Details

Agricultural Finance Review, vol. 73 no. 1
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 6 July 2015

Jaclyn Kropp and Janet G. Peckham

In recent years, prices for prime farmland have increased substantially, begging the question is the dramatic increase the result of a speculative bubble or consistent…

Abstract

Purpose

In recent years, prices for prime farmland have increased substantially, begging the question is the dramatic increase the result of a speculative bubble or consistent with market fundamentals with increases driven by increased global demand, low interest rates, and recent changes to US agricultural and energy policies. The purpose of this paper is to investigate the impacts of recent agricultural support policies and ethanol policies on farmland values and rental rates.

Design/methodology/approach

Farm-level Agricultural Resource Management Survey data collected by the United States Department of Agriculture (USDA) between 1998 and 2008 as well as county-level data collected by the USDA, US Census Bureau, and Bureau of Economic Analysis are used to determine the impacts of recent agricultural support policies and ethanol policies on farmland values and rental rates, while controlling for parcel characteristics and urban pressure. Specifically, weighted ordinary least squares and two-stage least squares are used to investigate the impact of various governmental agricultural support policies, corn ethanol facilities location, and local corn ethanol production capacity on farmland values and rental rates.

Findings

The results indicate that government payments, urban pressure, and the proximity of the parcel to an ethanol facility have a positive impact on both farmland values and rental rates. More specifically, parcels located in the same county as at least one corn ethanol facility are more valuable and command higher rental rates. In addition, county-level ethanol production capacity is positively associated with farmland values and rental rates. An inverse relationship between distance of the parcels from an ethanol facility and farmland values is also found; a similar result is found for rental rates.

Research limitations/implications

The findings suggest that agricultural support payments and ethanol policies are capitalized into farmland values. These findings have important implications for the formulation of future farm policy. A limitation of the analyses is that farmland values are estimated by landowners; future research could utilize farmland transaction data to overcome potential biases generated by using landowner estimates. In addition, while our study period covers 11 years, future research could expand the time period further to analyze the effect of more recent agricultural and ethanol policies.

Originality/value

This paper extends prior research pertaining to factors influencing farmland values and rental rates by also examining the proximity of the parcel to an operating ethanol facility using a unique data set.

Details

Agricultural Finance Review, vol. 75 no. 2
Type: Research Article
ISSN: 0002-1466

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Article
Publication date: 1 March 2013

Song Shi and Iona McCarthy

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.

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Practical implications

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.

Originality/value

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

Details

Journal of Property Investment & Finance, vol. 31 no. 2
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 3 August 2010

James M. Williamson, Michael P. Brady and Ron Durst

The purpose of this paper is to examine the use of Section 1031 of the Internal Revenue Code (IRC), a piece of US tax law that allows for tax‐deferred exchanges of…

Abstract

Purpose

The purpose of this paper is to examine the use of Section 1031 of the Internal Revenue Code (IRC), a piece of US tax law that allows for tax‐deferred exchanges of like‐kind property.

Design/methodology/approach

The paper derives a theoretical premium value for exchanges and presents the first national level analysis of Federal tax data on the use of like‐kind exchanges involving farmland between 1999 and 2005.

Findings

There is significant interest in Section 1031 from stakeholders in rural communities because there is widespread belief that the recent growth in farmland values may have, in part, been stimulated by Section 1031 exchanges of farmland. Despite these concerns, little is known about the extent of such exchanges.

Originality/value

This paper provides insight into the value and use of the IRC's Section 1031 provision. Based on simulations of a theoretical model using plausible assumptions about asset growth, the paper shows how proposed tax changes will affect the tax value of the deferral.

Details

Agricultural Finance Review, vol. 70 no. 2
Type: Research Article
ISSN: 0002-1466

Keywords

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