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Causes and impacts of developments on agricultural land markets
Project
Project code: TI-LR-08-PID1396
Contract period: 01.01.2011
- 31.12.2016
Purpose of research: Inventory & Assessment
Along with a rising competition for agricultural land, policymakers are called upon for more governmental regulation on the land market. We analyze land market developments in order to assess relevant causes and impacts. This allows for an evaluation of governmental regulatory instruments. The agricultural land market has increasingly gained public attention in the last years. Land prices have risen substantially. Farmers are competing more and more for less and less farmland . At the same time, farmland has become an attractive investment opportunity for investors from outside agriculture. Farmers are therefore demanding more governmental regulation. Public debates are characterized both by a high degree of emotionality and poor empirical knowledge of actual market transactions. The Thünen Institute provides the government with expertise, comments and own assessments, aiming at the generation of knowledge about the land market development and its impacts, and striving to allow for an evaluation of governmental regulatory instruments. Recently, three studies have been published on the relevance of non-agricultural and supra-regional investors on the German farmland market. We have assessed the impacts of these investors on agricultural structures and on rural areas. Secondly, we have analyzed the role of such investors as buyers of capital shares of agricultural companies. On this question, we have recently conducted comprehensive case studies on share ownership structures of legal entities in East Germany. The results have been published at the end of 2015. At the same time we have participated in a Federal States’ Working Group on land market policy in an advisory function. This Working Group has been in charge of developing a land-policy target system and options for legislative measures. Little can be concluded for the relevance and impacts of non-agricultural investors from statistical data on land market developments. Therefore, generating quantitative data is a major task of the sub-projects. This is done by expert interviews and case studies at the local level. Recently we have analyzed data on capital ownership in agricultural enterprises with certain legal forms (Cooperative, Stock Company, Limited Liability Company) with respect to characteristics of the shareholders. Data are provided by public registers and commercial business databases.
The recent increase in farmland prices is due to many reasons. There are agricultural as well as political and macroeconomic influences. The impact by supra-regionally active investors is recognizable mainly in East Germany. However, these investors are not a homogeneous group, but appear in a broad range from West German farmers to the agri-food industry and private investors from various economic sectors. The latest study has shown that the importance of supra-regional investors differs greatly between the federal states. Especially Mecklenburg-Western Pomerania is affected to a greater extent. When capital shares of agricultural enterprises are sold to external investors, farmland owned by these enterprises is indirectly transferred to new owners. Further research is needed on the impacts of these investors on agricultural structures and rural areas.
Section overview
Subjects
- Agricultural Sociology
- Agroeconomics
