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The political economy of farmland ownership regulations and land prices

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  • Shon Ferguson
  • Hartley Furtan
  • Jared Carlberg

Abstract

One of the most ubiquitous forms of agricultural regulation is a restriction on farmland ownership. One Canadian example of a farmland ownership restriction is The Saskatchewan Farm Security Act (FSA), passed in 1974. The purpose of this article is to explain, using a political economy framework, why the FSA was implemented and to estimate the effect of the FSA on Saskatchewan farmland values. A Present Value (PV) model is used to estimate the relationship between land values, rents, and the regulation. The Hausman endogeneity test reveals that the regulation variable is endogenous with the land price. The sign of the regulation variable is negative, which fits with the theory, i.e., the more stringent the regulation the lower the land value. We estimate that the regulation lowered Saskatchewan farmland prices by an average of 4 to 34 US$/acre, depending on whether ordinary least squares (OLS) or two‐stage least squares (TSLS) is employed in the estimation, over the period of 1974–2001.

Suggested Citation

  • Shon Ferguson & Hartley Furtan & Jared Carlberg, 2006. "The political economy of farmland ownership regulations and land prices," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 59-65, July.
    • Handle: RePEc:bla:agecon:v:35:y:2006:i:1:p:59-65
    DOI: 10.1111/j.1574-0862.2006.00139.x
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    Cited by:

    1. Bell, Peter N, 2014. "Farmland Ownership Policy: Technical Paper," MPRA Paper 53185, University Library of Munich, Germany.
    2. Micheels, Eric T. & Nolan, James F., 2016. "Examining the effects of absorptive capacity and social capital on the adoption of agricultural innovations: A Canadian Prairie case study," Agricultural Systems, Elsevier, vol. 145(C), pages 127-138.
    3. B. James Deaton & Chad Lawley, 2022. "A survey of literature examining farmland prices: A Canadian focus," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(2), pages 95-121, June.
    4. Chi Su & Richard A. Schoney & James F. Nolan, 2023. "Buy, sell or rent the farm: succession planning and the future of farming on the Great Plains," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 18(3), pages 627-669, July.
    5. Schwab, Benjamin & Butsic, Van A., 2017. "Green Acres? Cannabis agriculture and rural land values in Northern California," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258486, Agricultural and Applied Economics Association.
    6. Annette Aurélie Desmarais & Darrin Qualman & André Magnan & Nettie Wiebe, 2017. "Investor ownership or social investment? Changing farmland ownership in Saskatchewan, Canada," Agriculture and Human Values, Springer;The Agriculture, Food, & Human Values Society (AFHVS), vol. 34(1), pages 149-166, March.
    7. Gabruch, Mandy L. & Micheels, Eric T., 2017. "2016 WAEA Winning Student Submission: The Effect of Saskatchewan's Ownership Restrictions on Farmland Values," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(1), pages 1-13, January.
    8. Bell, Peter N, 2014. "Farmland Ownership Restrictions: Between a Rock and a Hard Place," MPRA Paper 53033, University Library of Munich, Germany.
    9. Pavel Ciaian & Edoardo Baldoni & d'Artis Kancs & Dušan Drabik, 2021. "The Capitalization of Agricultural Subsidies into Land Prices," Annual Review of Resource Economics, Annual Reviews, vol. 13(1), pages 17-38, October.
    10. Lars Isenhardt & Stefan Seifert & Silke Hüttel, 2023. "Tenant Favoritism and Right of First Refusals in Farmland Auctions: Competition and Price Effects," Land Economics, University of Wisconsin Press, vol. 99(2), pages 302-324.

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