effects of the eu common agricultural policy and u.s. farm policy on agricultural land markets
TRANSCRIPT
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
1/24
Effects of the EU Common
Agricultural Policy and U.S. Farm
Policy on Agricultural Land Markets
Harald von Witzke and Steffen Noleppa
Berlin, Germany
P. Lynn Kennedy
Louisiana, United States
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
2/24
2007 The German Marshall Fund o the United States. All rights reserved.
No part o this publication may be reproduced or transmitted in any orm or by any means without permission
in writing rom the German Marshall Fund o the United States (GMF). Please direct inquiries to:
The German Marshall Fund o the United States
1744 R Street, NW
Washington, DC 20009
T 1 202 745 3950
F 1 202 265 1662
This publication can be downloaded or ree at http://www.gmus.org/publications/index.cm. Limited print
copies are also available. To request a copy, send an e-mail to [email protected].
GMF Paper Series
The GMF Paper Series presents research on a variety o transatlantic topics by sta, ellows, and partners o the
German Marshall Fund o the United States. The views expressed here are those o the author and do not neces-
sarily represent the view o GMF. Comments rom readers are welcome; reply to the mailing address above or by
e-mail to [email protected].
About GMF
The German Marshall Fund o the United States (GMF) is a non-partisan American public policy and grant-making institution dedicated to promoting greater cooperation and understanding between the United States
and Europe.
GMF does this by supporting individuals and institutions working on transatlantic issues, by convening leaders
to discuss the most pressing transatlantic themes, and by examining ways in which transatlantic cooperation can
address a variety o global policy challenges. In addition, GMF supports a number o initiatives to strengthen
democracies.
Founded in 1972 through a git rom Germany as a permanent memorial to Marshall Plan assistance, GMF
maintains a strong presence on both sides o the Atlantic. In addition to its headquarters in Washington, DC,
GMF has six ofces in Europe: Berlin, Bratislava, Paris, Brussels, Belgrade, and Ankara.
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
3/24
T Pb 3
C A L M
G US 4
T Fw 1
T Db P B
bw Lw O 15
C 19
R
Effects of the EU Common Agricultural Policyand US Farm Policy on Agricultural Land Markets
The Distribution of Farm Policy Benefits Between
Land Owners and Operators
A Report to the German Marshall Fund of the United States
August 2007
H v Wz
Hb Uv B, G
P L K
L S Uv, U S
S N
, B, G
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
4/24
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
5/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets3
A z v bz1 C A P (CAP)
Ep U pv b v w pp pp (b p ,xp b, p q, p p, ) p, w p p Lw, US vb L D P w pp E
p b pz x p p b pp w , w p w b EU US p
x w , b pHwv, w p xp, b p , p p p b w , b p p b b b A p w p, b w w
bjv pp
z G U S w b p pv w q w p b w w w p
1The problem
1 T , wv, allz B Nw Z A v b p p , f p- b
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
6/24
he German Marshall Fund o the United States4
2.1 Germany
G p D p10 , b b 25 p (BMELV, v v)A p, ppx 350,000 p G, b 17 ()A 60 p , w 70 p p (DESAIS, 2006)
1990 (F 1)
, pp G, U S, v w p z p p, p x 12
D pv bw W E G I
W G, pp 30 p
1980 v 50 p , w E b b b 80 p G 1990
I w p bw E W(F 2; b 1 2) I 2005, v p E w b 55 p p W I v p W b G , w E p b b 40 p
p v bwW E G ( D, 2002; N Lw, 2007):
Inthefirstfewyearsafterunification,farms
E w p p w b w w w w
TheGermanagriculturallandprivatization, w
Characteristics of the agricultural
Land Markets in Germany and the U.S.2
1991 1993 1995 1997 1999 2001 2003 2005
50
55
60
65
Share
ofrented
land
in
%
Year
S: Ap D (2002) DESAIS (v v)
Figure 1: The Growing Importance o Agricultural Land Rental in Germany, 19912005
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
7/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets5
E G , bw p
IntheWesttherecontinuestobeamore
p , w E v p pw
EasternGermanyislessdenselypopulated
W; , v , p b w
AveragelandqualityislowerinEastern
W G, w vb( w pp)
A w b , CAP b p 1990 I p, b v b v b p b p, w x p p, b b
p b, b b N b b b H, b
A F 3 , CAP pp b , , p b I , p z b x pp p b qv (PSE),w ppp p w b O E C-p Dvp(OECD) w w A v, p CAP p pp EU
, b pp x PSE v b 20 p 1991 L p v b 20 p p pp p E G
1991 1993 1995 1997 1999 2001 2003 20050
50
100
150
200
250
RentalPrices
in
EUR
PerHa
Year
West Germany
East Germany
Figure 2: The Rental Price o Agricultural Land in Germany, 19912005
S: Ap D (2002) DESAIS (v v)
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
8/24
he German Marshall Fund o the United States6
Table 1: The Price o Crop Land in New (Multiyear) Rental Agreements, 1999 and 20051
RegionRental land price (EUR per ha) Change in price of
rental land (percent)1999 2005
W G L 285 295 3
B-Wb 206 256 24
B 292 269 -8
H 177 211 19
N 326 337 3
N-W 372 394 6
R-Pz 190 201 6
Sw-H 314 296 -6
E G L 119 140 18
Bb 81 86 6
Mb-Vp 105 147 40
S 106 135 27
S-A 167 186 11
120 165 37
S: Ap DESAIS (v v)
1 N B, B, Hb, S
Table 2: The Price o Pasture and Grazing Land in New (Multiyear) Rental Agreements,
1999 and 20051
Region Rental land price (EUR per ha) Change in price ofrental land (percent)1999 2005
W G L 163 146 -10
B-Wb 128 113 -12
B 176 162 -8
H 84 89 6
N 173 148 -14
N-W 195 182 -7
R-Pz 98 85 -13
Sw-H 198 174 -12
E G L 61 69 13
Bb 54 64 18Mb-Vp 61 70 15
S 61 75 23
S-A 67 71 6
68 65 -4
S: Ap DESAIS (v v)
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
9/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets7
2.2 United States
S G, US wp B 2002C A (NASS, 2002), w
ppx 213 p U S j v 938 p b 392 p 1997 176 p p A b , p- U S,p bw b , b w (b 3, 4, 5)
S j
b x v, v v w v U S b M V P b V w q xb U S
w, v zHwv, Mw S M v 265 p b , p b ,017 p, v
bw v q p I p, b b w p v , b vA v xb b 6
I V, p b
x pp b w V x p v , p pw p p p A , v
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 200560
80
100
120
140
Indexin
%
Year
Rental Price PSE Rental Price
Figure 3: Land Rental Prices and Agricultural Subsidies, 1991-2005 (1991 = 100 per cent)
S: Ap BMELV (2007), DESAIS (v v), OECD (2007)
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
10/24
he German Marshall Fund o the United States8
Table 5: Total Cropland, 1982-2002
Region1982
1,000 Acres1987
1,000 Acres1992
1,000 Acres1997
1,000 Acres2002
1,000 Acres
M 24,183 23,422 23,511 22,839 23,264
V 4,753 4,613 4,436 4,340 4,16848 S1 468,888 463,580 459,654 454,691 441,273
S: USDA/ERS (2007)
Table 4: Land in Farms and Harvested Cropland, 1997 and 2002
Land in FarmsFarmland area (Acres) Change in farmland
1997 2002 Percent
M 27,560,621 27,512,270 -017
V 8,753,625 8,624,829 -149
U S 954,752,502 938,279,056 -176
Hv Cp
M 19,794,078 19,398,309 -204
V 2,600,860 2,623,776 088
U S 318,937,401 302,697,252 -537
S: USDA/NASS (v v)
1 Ex A Hw
Table 3: Farms Numbers, 1997 and 2002
Land in FarmsNumber of Farms Change
1997 2002 Numbers Percent
M 78,755 80,839 2,084 265
V 49,366 47,606 -1,760 -357
U S 2,215,876 2,128,982 -86,894 -392
S: USDA/NASS (v v)
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
11/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets9
p pv b pz v , p w p pv Gv pp b p, p, p v V
O , M V A M b xp p
v , - vv b , p- p b- xp b M bw 1997 2002 I , p M b v pp Gv p p p M
Table 6: Average Dollar Value o Cropland per Acre, 2002-2006
Region2002USD
2003USD
2004USD
2005USD
2006USD
Change20052006
Percent
N 3,210 3,400 3,800 4,390 5,040 148
L S 1,720 1,860 2,030 2,270 2,550 123
C B
N P
App
S
D S
S P
M
P
M
V
2,180
720
2,340
2,240
1,160
808
1,120
3,410
1,430
2,550
2,270
737
2,490
2,350
1,210
863
1,170
3,500
1,520
2,800
2,450
783
2,670
2,460
1,270
902
1,200
3,570
1,690
3,300
2,880
916
3,040
3,660
1,460
1,010
1,420
4,620
1,950
4,100
3,230
1,040
3,450
4,550
1,600
1,180
1,750
4,850
2,180
5,300
122
135
135
243
96
168
232
50
118
293
48 S1 1,590 1,660 1,770 2,110 2,390 133
S: USDA/NASS (v v)
1 Ex A Hw
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
12/24
he German Marshall Fund o the United States10
I pp, p b pp E
p qv v p F v p p v xp v p F p , p v xp v p b p I w, ww
v p :
(1) VMP = (Q/L) P = D
VMP = V pQ/L = P p
; p p p q p , b q
P = P p
D = D
w O pv p b p p, , b b p I , PSE bv v p pp qv b
p v pp , PSE p p
pp b b vb ( v, 2007); w p Hwv, v
pp w p , q pp p p b p pp v w b p b bw pp
G, w pv p , b, p p b w
p b H, xp b b w p R, w p b w pv b w:
(2) P b w= ||P b
= P ;
(p )/ ( p p )
= P pp ;
(p pp ) /(p p )
F 4 p w bp w p z x (L),w v x p () v p (VMP)
N pp (S) (p) (VMP1
0 VMP1
1) F 4 p p VMP
0 p v p b b p p
Theoretical framework
3
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
13/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets11
b v VMP0 pppw VMP
1 A b bv, p b (S) p 0 1 b w
3.1 Specification for Germany
EpU G w p, p pp b p
w x p p , , p p EUR p pp p pp v j p p
A bv, p CAP pp p v b A b q, v p , , p pp pp, wv, b pb p b b p I , p b b p b H, p b j p p q p Ep U (B H, 2007)
p p w p p v v
VMP1
1
S
S
L1
L0
L
VMP1
0
r1
r0
VMP1
1, r
0
Figure 4: The Land Rental Price Eect o Agricultural Producer Price Support
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
14/24
he German Marshall Fund o the United States12
, , p Hwv, b v p v w , p q b , xp b p, v p v xp w p p U S 1996 F
F A EU pp vw p b v w (A , 2007;H , 2005) , bq, p I , bv vp G w w p pb
p w b p b v p
p p b b p (Lpp, 2001) p F 5
F4 xp p v p v VMP
2 A w p (2)
p b (S) pp, w
A w , v, p G w b v b b, b q p F 6,w p w b (1)
S: Ap Lpp (2001)
VMP1
1
VMP1
2
S
S
S
L1
L2
L0
L
VMP1
0
r1
r2
r0
VMP11
, r
0
Figure 5: The Land Rental Price Eect o Agricultural Producer Price Support Plus Direct Payments
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
15/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets13
v; , b x
3.2 Specification for the United States
A pv , v p v p,b p p, v p v E p pv v p, v p p(p p) N v (wv p) b pp , v
p w v p b w:
(3) R = P Q
R = RvQ = Q p
(4) R/R = P/P + Q/Q
Hwv, p p p v Dp p w v , w p wb pv O , p
VMP1
1
VMP1
2
S
S
S
L
VMP1
0
r1
r2
r0
VMP1
1, r
0
Figure 6: The Land Rental Price o Agricultural Land Would be Negative in the Absence
o Subsidies in Certain Regions o Germany (Eastern Germany, Poor Soils)
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
16/24
he German Marshall Fund o the United States14
p v vp -w x ww p v A , p p p b
I x v, w b pp:
(5) L V = (C Rp ( b p), Cp Gv
P, DpGv P)
I p pvb, v b b F xp, x v , , v v ,
vb w b p p A, bw x p p b p w w v pp p p p p, w
vb v b p
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
17/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets15
4.1 Evidence for Germany
I p b wM pp z ( Cb,1995; Hp, 1985) w p ppz b p v O p pz b v ( I, 2003;F, 2002; G, 2002) I ,
w v vv pp vb pp w pv b (01) 02 b w b Z (2003)
p(q 2) EUR b w v EUR 067 w EUR 033 b 7 xb b p b bw w
p Sb p p pp Rb CAP pp p, xp , pp pp w pv p
p p v wp pp x, , w , D vb
b - p EUR 40 EUR 60p I b 7 b - EUR 50 p p
b 7 b b b EUR 550 p O ,p b EUR 200, w EUR 350 p w
4 The Distribution of Policy BenefitsBetween Landowners and Operators
Table 7: The Distribution o Farm Policy Benefts Between Landowners
and Operators in Germany, 2005/06
Region Western Germany Eastern Germany
b(EUR p )1
568 533
P w b(EUR p )2
375 240
Sb w (EUR p )
379 355
Sb w p
(EUR p )189 178
P wSb (EUR p )
-4 -115
S: Ow b BMELV (2007)
1 T b p pp p p I qv f 62 C p w p b p
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
18/24
he German Marshall Fund o the United States16
b b b 7 q , p G , p , w b v b b Hwv, b b p w p, w
() N US Ep w bb v p w w p
pv v j p 30 F , U S jw xp, b p v p ( USDA/ERS,2007) Lw G wxp v w xp pp v p (v Wz Npp, 2006)
() p w p , , b p b U S Ep U ( A,1992) B p , w w p xp I b, p b US EU b p xp w,
, p w p(v Wz H, 1997) I w, b v px vp w p v w pUS EU p F , US Dp A (2007) w p x v w p U S 2004 2005 p w p, ,
b pp p b
() Sb pv (EU, 2003)I b b, wb z (
v Wz Npp, 2006)
(v) F b v w b b w b , w pbb b v b
b p b 8 I xb b p p x L (v ) G
Table 8: The Eect o Sugar Beet Price Support on Farm Land Rental Prices
in Selected Landkreise (Administrative Districts) in Germany, 2005/06
Region Western Germany Eastern Germany
L1 HI WF B OK EE OSL
A p b(p)
22 19 7 3 3 0
P (EUR p )
436 421 399 180 118 108
S: Ow b BMELV (2007)
1 HI H; WF Wb; B B; OK O; EE Eb-E; OSL Obpw-Lz
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
19/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets17
S b b b p b pp v v I , p p b w w p I p, v p qw b v L HI, WF, B, OK px z b
v - Hwv, w vp b
p, , b b L EE OSL v p b p z b p w p, , b b b b p
4.2 Evidence for the United States
A w v p 19982004, w xp A, Hw, v N x
p p vp v I v b p x bwb -b-p w b 9
A - w pbw p v bpv 05492 p p, b
p , b, vb 05492 p A p G, b b w p b p p w w G p v A bz pp w, p b ,
vp, vw p
Table 9: The Determinants o Agricultural Land Values in the United States
Land value (log) Coefficient Standard Error t P > t
C 49153 01778 276400 0000
C p () 05492 00353 155500 0000
Gv p () -02526 00550 -45900 0000
b p 01513 00497 30400 0003
1998 02053 00919 22300 0026
1999 04358 01066 40900 0000
2000 05152 01130 45600 00002001 05456 01081 50500 0000
2002 04620 00969 47700 0000
2003 05243 01032 50800 0000
2004 04739 01000 47400 0000
R-q = 05839
S: Ow p b USDA/NASS (v v), G (2002) Gw (2003)
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
20/24
he German Marshall Fund o the United States18
p pbjv S- p b vw bjv p pw - w p w bz vp vw pp b pv
p v b b bp b p zb b I , , p v b p
15 p bv -b-p w b p G S Ep U v bz H p w b p
F US , b b b 10 10 p p p b b A v, b b pz v
p v v p ww b v Hwv, p, p p p w b w q p p
Table 10: The Eect o a Subsidy Which Increases Cash Receipts by 10 Percent
on Agricultural Land Values in Selected U.S. States
TobaccoProducers
Land Value(USD per acre)
CashReceipts(USD per acre)
10%Cash ReceiptIncrease
LandValue Chan(USD per ac
K 116286 14868 1487 6386
N C 254714 33100 3310 13989
S C 148000 24123 2412 8128
220429 14818 1482 12106
V 243000 18354 1835 13346
Non-TobaccoProducers
Land Value(USD per acre)
CashReceipts
(USD per acre)
10%Cash Receipt
Increase
LandValue Chan
(USD per ac
C 566143 238798 23880 31093F 356000 367640 36764 19552
I 242286 12773 1277 13306
Iw 202714 11682 1168 11133
M 138000 10085 1009 7579
S: Ow b NASS (v v), BEA (2007) b 9
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
21/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets19
A b EpU U S v bz v :
Theyleadtoamisallocationofresources
w w
Theyresultinburdensomebudgetary
xp
Theydelaystructuraladjustmentin
w w
pv
Theyareinequitableinthattheybenefit
Theyerodeincentivesindeveloping
v , p v, v pv
I pp w v z p b Ep U
G US b v U S W p b p w w w p
O v E p G , w- p w q vv pb pp , b w b p b w
p b b Ep U;wv, w v , b w , b b p b I , b EU bw b v G
b p w b z
b p p p b pI p w pv p bw b p
p US p v b EU A p b v p v b x- p I U S, b b j p b N p, v b-p 15p -b-p I , v p w b w vp v w p v b , U S p b w b p b v
Conclusions
5
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
22/24
he German Marshall Fund o the United States20
M C A Hw Dp PA R A w FS? Ab Wv 2(3) (2007): 1-2
E B J-H H S N E- AKqz Lw, B Ap Dp AE R Dvp,G Uv G, 2007
BEA (B E A), R
E A U S Dp C, W, DC D I: p://wwwbv///?&b=CA45 , J 2007
BMELV (B E,Lw Vbz),Sp I Rq G F A D Nw(FADN) BMELV, B, 2007
BMELV (B E,
Lw Vbz),Ap B BB, B, v v
R G Cb I AP J Pb E 57 (1995):317-335
DESAIS, (S B) F3, R 216 DESAIS, Wb, v v
H D Z Ew w B
L B Lw, Bw, 2002
Ep U C R2003/555 26 J 2003 Ep U,B, 2003
C F I P- P P R A L A L P G J A E 51 (2002): 396-404
B G US C P L P Dp A R E W Pp,WP 02-02 Uv M,C P, M, 2002
H G Aw Epp v Az
EU-G G J A E 51 (2002): 389-395
B K Gw W W w OM A L V? AJ A E 85(2003):744-752
C H F S Hw Dp Dp P? Ev I EC 4 (2005): 30-35
H A Hp D B Bp, Bpb Aw E Gvz BV, K, 1985
F I W Eppv Ep K Abb FAL 1/2003, B Lw, Bw, 2003
C Lpp Z Aw vPz, b P
pb P Pp Uv M, M, 2001
References
6
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
23/24
Eects o the EU Common Agricultural Policy and US Farm Policy
on Agricultural Lan d Markets21
M L E, L V DDp App E,Uv M, S P D I: p:///, J 2007
N Lw, B2006/2007 Sp I, 2007
OECD (Oz E Cp Dvp) Ep U, Spp E OECD, P, 2007
C v A L P D I: www//L/L0016, M 2007
R K A D WF M Cb Uv P,Cb, 1992
USDA/ERS (U S Dp A, E R Sv),C R E, 2004/05, W D I: wwwv/D/CA
R/p, 07 J 2007USDA/ERS (U S Dp A, E R Sv), MjL U, D S USDA, W, DCD I: p://wwwv//j/, J 2007
USDA/NASS (U S Dp A, N A S),Sv, L V C R SUSDA, W, DC, v v
H v Wz S Npp DbvE D P G A Nw C A P Ep U A Rp GM F U S B, 2006
H v Wz U H P E M R
A P P Spp: A Rv I A Cpv R R (), D, A 1997
J Z V EU-Ap Ap Lw L9/2003: 2-5
-
8/8/2019 Effects of the EU Common Agricultural Policy and U.S. Farm Policy on Agricultural Land Markets
24/24
www.gmfus.org
Off i c e s
Washington Berlin Bratislava ParisBrussels Belgrade Ankara Bucharest
www.gmu.org