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Farmland Liquidation and Transaction Costs

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  • TAKAHASHI, Daisuke

Abstract

This paper discusses why progress in farmland liquidation through leasing has been very slow in the agricultural sector in Japan, focusing on the transaction costs related to farmland leasing. First, this paper points out that transaction costs are an important constraint for farmland leasing, and argues by means of a survey of related studies, why transaction costs have a strong association with farmland. Next, it explores using partial equilibrium analysis how the aggregated demand and supply of farmland is affected by the changes in the farmers' activities that face a transaction cost. Following this, the paper estimates the extent to which farmland leasing is affected by the characteristics of farmland and local communities. The data used in the analysis is the prefectural panel data of the agricultural census for the years 1980, 1990, and 2000; the data excludes Hokkaido, Tokyo, Kanagawa, Osaka, and Okinawa. The result of the econometric analysis shows that the level of farmland leasing is related to the variables representing the activities of local communities and the characteristics of farmland such as land improvement and conversion of farmland. These results emphasize the importance of developing and reinforcing institutions and organizations to lower the transaction costs in the farmland market.

Suggested Citation

  • TAKAHASHI, Daisuke, 2010. "Farmland Liquidation and Transaction Costs," Journal of Rural Economics, Agricultural Economics Society of Japan, vol. 81(3), pages 1-14, December.
    • Handle: RePEc:ags:aesjre:164630
    DOI: 10.22004/ag.econ.164630
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    Cited by:

    1. Arimoto, Yutaka & 有本, 寛 & アリモト, ユタカ, 2011. "The impact of farmland readjustment and consolidation on structural adjustment: The case of Niigata, Japan," CEI Working Paper Series 2011-3, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    2. Maiko Nishi, 2023. "Japanese land reform in the new era? Farmers’ wellbeing and sustainable farmland management," Environment and Planning C, , vol. 41(3), pages 429-447, May.
    3. Hironori Yagi & Tsuneo Hayashi, 2021. "Machinery utilization and management organization in Japanese rice farms: Comparison of single‐family, multifamily, and community farms," Agribusiness, John Wiley & Sons, Ltd., vol. 37(2), pages 393-408, April.

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