IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v126y2023ics0264837723000194.html
   My bibliography  Save this article

The impact of long-term land leases on farm investment: Evidence from the Irish dairy sector

Author

Listed:
  • Bradfield, Tracy
  • Butler, Robert
  • Dillon, Emma J.
  • Hennessy, Thia
  • Loughrey, Jason

Abstract

The European Union milk quota abolition in 2015 resulted in rapid dairy farm expansion across many Member States. Continued production growth requires both capital and herd investment with secure access to land resources being important for new and expanding farmers. As land sales and rental remain low in Ireland, tax incentives to encourage long-term land rental were increased in 2015. This paper assesses the influence of the length of land leases on dairy farm investment using farm-level data from 2015 to 2018 in the context of low levels of land sales and land rental, and liberal market regulations in Ireland. We find a positive association between lease lengths and both the probability and level of capital investment which is particularly important for farmers with a high portion of land rented in. We find that herd investment is not influenced by the duration of land leases. Our findings call for an extension of policies that encourage land rental on secure leases, especially for young farmers, to increase certainty and support growth in the industry.

Suggested Citation

  • Bradfield, Tracy & Butler, Robert & Dillon, Emma J. & Hennessy, Thia & Loughrey, Jason, 2023. "The impact of long-term land leases on farm investment: Evidence from the Irish dairy sector," Land Use Policy, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:lauspo:v:126:y:2023:i:c:s0264837723000194
    DOI: 10.1016/j.landusepol.2023.106553
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837723000194
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.landusepol.2023.106553?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Geoghegan, Cathal & O'Donoghue, Cathal, 2018. "Socioeconomic drivers of land mobility in Irish agriculture," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 7(2), December.
    2. Kath Hulse & Vivienne Milligan, 2014. "Secure Occupancy: A New Framework for Analysing Security in Rental Housing," Housing Studies, Taylor & Francis Journals, vol. 29(5), pages 638-656, July.
    3. Zein Kallas & Teresa Serra & Jos頠 M. Gil, 2012. "Effects of policy instruments on farm investments and production decisions in the Spanish COP sector," Applied Economics, Taylor & Francis Journals, vol. 44(30), pages 3877-3886, October.
    4. O’Toole, Conor & Hennessy, Thia, 2015. "Do decoupled payments affect investment financing constraints? Evidence from Irish agriculture," Food Policy, Elsevier, vol. 56(C), pages 67-75.
    5. Chris D. Arnot & Martin K. Luckert & Peter C. Boxall, 2011. "What Is Tenure Security? Conceptual Implications for Empirical Analysis," Land Economics, University of Wisconsin Press, vol. 87(2), pages 297-311.
    6. Cragg, John G, 1971. "Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods," Econometrica, Econometric Society, vol. 39(5), pages 829-844, September.
    7. Wästfelt, Anders & Zhang, Qian, 2018. "Keeping agriculture alive next to the city – The functions of the land tenure regime nearby Gothenburg, Sweden," Land Use Policy, Elsevier, vol. 78(C), pages 447-459.
    8. Doris Läpple & Gordon Sirr, 2019. "Dairy Intensification and Quota Abolition: A Comparative Study of Production in Ireland and the Netherlands," EuroChoices, The Agricultural Economics Society, vol. 18(3), pages 26-32, December.
    9. Tzu-Wei Joy Tseng & Brian E. Robinson & Marc F. Bellemare & Ariel BenYishay & Allen Blackman & Timothy Boucher & Malcolm Childress & Margaret B. Holland & Timm Kroeger & Benjamin Linkow & Moustapha Di, 2021. "Influence of land tenure interventions on human well-being and environmental outcomes," Nature Sustainability, Nature, vol. 4(3), pages 242-251, March.
    10. Myyra, Sami & Pietola, Kyosti & Yli-Halla, Markku, 2007. "Exploring long-term land improvements under land tenure insecurity," Agricultural Systems, Elsevier, vol. 92(1-3), pages 63-75, January.
    11. Markus Goldstein & Christopher Udry, 2008. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 981-1022, December.
    12. Marks-Bielska, Renata, 2021. "Conditions underlying agricultural land lease in Poland, in the context of the agency theory," Land Use Policy, Elsevier, vol. 102(C).
    13. Andrius Kazukauskas & Carol Newman & Daragh Clancy & Johannes Sauer, 2013. "Disinvestment, Farm Size, and Gradual Farm Exit: The Impact of Subsidy Decoupling in a European Context," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(5), pages 1068-1087.
    14. Theodoros Skevas & Feng Wu & Zhengfei Guan, 2018. "Farm Capital Investment and Deviations from the Optimal Path," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 561-577, June.
    15. Johan Swinnen & Pavel Ciaian & d’Artis Kancs, 2008. "Functioning of Land Markets in the EU Member States," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 48-62.
    16. Ai, Chunrong & Norton, Edward C., 2003. "Interaction terms in logit and probit models," Economics Letters, Elsevier, vol. 80(1), pages 123-129, July.
    17. Bradfield, Tracy & Butler, Robert & Dillon, Emma J. & Hennessy, Thia, 2020. "The factors influencing the profitability of leased land on dairy farms in Ireland," Land Use Policy, Elsevier, vol. 95(C).
    18. Tracy Bradfield & Robert Butler & Emma Dillon & Thia Hennessy & Paul Kilgarriff, 2021. "The Effect of Land Fragmentation on the Technical Inefficiency of Dairy Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 486-499, June.
    19. Johannes Sauer & Uwe Latacz-Lohmann, 2015. "Investment, technical change and efficiency: empirical evidence from German dairy production," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(1), pages 151-175.
    20. Verkaart, Simone & Munyua, Bernard G. & Mausch, Kai & Michler, Jeffrey D., 2017. "Welfare impacts of improved chickpea adoption: A pathway for rural development in Ethiopia?," Food Policy, Elsevier, vol. 66(C), pages 50-61.
    21. Liesbet Vranken & Ewa Tabeau & Peter Roebeling & Pavel Ciaian, 2021. "Agricultural land market regulations in the EU Member States," JRC Research Reports JRC126310, Joint Research Centre.
    22. Besley, Timothy, 1995. "Property Rights and Investment Incentives: Theory and Evidence from Ghana," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 903-937, October.
    23. Aramyan, Lusine H. & Lansink, Alfons G.J.M. Oude & Verstegen, Jos A.A.M., 2007. "Factors underlying the investment decision in energy-saving systems in Dutch horticulture," Agricultural Systems, Elsevier, vol. 94(2), pages 520-527, May.
    24. Johan Swinnen & Kristine Van Herck & Liesbet Vranken, 2016. "The Diversity of Land Markets and Regulations in Europe, and (some of) its Causes," Journal of Development Studies, Taylor & Francis Journals, vol. 52(2), pages 186-205, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Silvia Russo & Rino Ghelfi & Meri Raggi & Davide Viaggi, 2024. "Factors Affecting the Land Investment Decisions in the Old Members of the European Union: A Systematic Literature Review," Land, MDPI, vol. 13(4), pages 1-18, April.
    2. Seidel, Claudia & Shang, Linmei & Britz, Wolfgang, 2023. "A critical assessment of neural networks as meta-model of a farm optimization model," Discussion Papers 338200, University of Bonn, Institute for Food and Resource Economics.
    3. Zhiqiang Cheng & Jinyang Cai, 2024. "How do climate anomalies affect the duration of land transfers? Evidence from China," Climatic Change, Springer, vol. 177(10), pages 1-20, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Huntington, Heather & Stevens, Caleb, 2023. "Taking stock of global land indicators: A comparative analysis of approaches for a globally consistent land tenure security measure," Land Use Policy, Elsevier, vol. 124(C).
    2. Adewale Henry Adenuga & Claire Jack & Ronan McCarry, 2021. "The Case for Long-Term Land Leasing: A Review of the Empirical Literature," Land, MDPI, vol. 10(3), pages 1-21, March.
    3. Meinzen-Dick, Ruth Suseela & Quisumbing, Agnes R. & Doss, Cheryl R. & Theis, Sophie, 2017. "Women’s land rights as a pathway to poverty reduction: A framework and review of available evidence," IFPRI discussion papers 1663, International Food Policy Research Institute (IFPRI).
    4. Ghebru, Hosaena & Girmachew , Fikirte, 2017. "Scrutinizing The Status Quo: Rural Transformation And Land Tenure Security In Nigeria," Feed the Future Innovation Lab for Food Security Policy Research Papers 264394, Michigan State University, Department of Agricultural, Food, and Resource Economics, Feed the Future Innovation Lab for Food Security (FSP).
    5. Kotchikpa Gabriel Lawin & Lota Tamini, 2018. "Droits de propriété foncière et performance des petits producteurs agricoles des pays en développement : une synthèse de la littérature empirique," CIRANO Working Papers 2018s-05, CIRANO.
    6. Onofri, Laura & Trestini, Samuele & Mamine, Fateh & Loughrey, Jason, 2022. "Understanding the Agricultural Land Leasing Market in Ireland: A Transaction Cost Approach," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321211, Agricultural Economics Society - AES.
    7. Meinzen-Dick, Ruth & Quisumbing, Agnes & Doss, Cheryl & Theis, Sophie, 2019. "Women's land rights as a pathway to poverty reduction: Framework and review of available evidence," Agricultural Systems, Elsevier, vol. 172(C), pages 72-82.
    8. Anthony Harris & Anthony D'Agostino & Sara Litke-Farzaneh & Beryl Seiler & Matt Sloan, "undated". "Morocco Land Productivity Project: Evaluation Design Report," Mathematica Policy Research Reports f3fc788501b64608b17e1cb23, Mathematica Policy Research.
    9. Asaaga, Festus A. & Hirons, Mark A. & Malhi, Yadvinder, 2020. "Questioning the link between tenure security and sustainable land management in cocoa landscapes in Ghana," World Development, Elsevier, vol. 130(C).
    10. Qian, Chen & Antonides, Gerrit & Heerink, Nico & Zhu, Xueqin & Ma, Xianlei, 2022. "An economic-psychological perspective on perceived land tenure security: Evidence from rural eastern China," Land Use Policy, Elsevier, vol. 120(C).
    11. Muna Shifa & Murray Leibbrandt & Martin Wittenberg, 2015. "Does tenure insecurity explain the variations in land-related investment decisions in rural Ethiopia?," SALDRU Working Papers 150, Southern Africa Labour and Development Research Unit, University of Cape Town.
    12. Ghebru, Hosaena & Khan, Huma & Lambrecht, Isabel, 2016. "Perceived land tenure security and rural transformation: Empirical evidence from Ghana:," IFPRI discussion papers 1545, International Food Policy Research Institute (IFPRI).
    13. Aragón, Fernando M., 2015. "Do better property rights improve local income?: Evidence from First Nations' treaties," Journal of Development Economics, Elsevier, vol. 116(C), pages 43-56.
    14. Thiemo Fetzer & Samuel Marden, 2017. "Take What You Can: Property Rights, Contestability and Conflict," Economic Journal, Royal Economic Society, vol. 0(601), pages 757-783, May.
    15. Fenske, James, 2014. "Trees, tenure and conflict: Rubber in colonial Benin," Journal of Development Economics, Elsevier, vol. 110(C), pages 226-238.
    16. Sonia Bhalotra & Abhishek Chakravarty & Dilip Mookherjee & Francisco J. Pino, 2019. "Property Rights and Gender Bias: Evidence from Land Reform in West Bengal," American Economic Journal: Applied Economics, American Economic Association, vol. 11(2), pages 205-237, April.
    17. Ramírez-Álvarez, Aurora Alejandra, 2019. "Land titling and its effect on the allocation of public goods: Evidence from Mexico," World Development, Elsevier, vol. 124(C), pages 1-1.
    18. Chen, Shuo & Lan, Xiaohuan, 2020. "Tractor vs. animal: Rural reforms and technology adoption in China," Journal of Development Economics, Elsevier, vol. 147(C).
    19. Fatema, Naureen, 2019. "Can land title reduce low-intensity interhousehold conflict incidences and associated damages in eastern DRC?," World Development, Elsevier, vol. 123(C), pages 1-1.
    20. Thomas Vendryes, 2014. "Peasants Against Private Property Rights: A Review Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 971-995, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:lauspo:v:126:y:2023:i:c:s0264837723000194. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.