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An experimental analysis of German farmers' decisions to buy or rent farmland

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  • Buchholz, Matthias
  • Danne, Michael
  • Mußhoff, Oliver

Abstract

Farmland is an essential agricultural production factor that farmers can choose to either buy or rent. In this paper, we apply a discrete choice experiment to analyse German farmers' individual buying and rental decisions for farmland. Our results reveal that farmers have a higher willingness to buy than to rent farmland. Covariates such as farmers' risk attitude affect the decisions in the discrete choice experiment while no effect was observable for individual expectations about future farmland prices. Direct payments considerably raise farmers' willingness to buy and rent farmland. Farmers' decisions deviate substantially from normative predictions from the present value model.

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  • Buchholz, Matthias & Danne, Michael & Mußhoff, Oliver, 2020. "An experimental analysis of German farmers' decisions to buy or rent farmland," FORLand Working Papers 18 (2020), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    • Handle: RePEc:zbw:forlwp:182020
    DOI: 10.18452/21037
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    Cited by:

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    2. Baldoni, Edoardo & Ciaian, Pavel, 2023. "The capitalization of CAP subsidies into land prices in the EU," Land Use Policy, Elsevier, vol. 134(C).
    3. Junnan Liu & Tong Chen & Yulan Song, 2022. "Coupling Coordination and Interactivity between Farmland Transfer and Rural Financial Development: Evidence from Western China," Sustainability, MDPI, vol. 14(24), pages 1-28, December.
    4. Jauernig, Johanna & Brosig, Stephan & Hüttel, Silke, 2023. "Profession and residency matter: Farmers' preferences for farmland price regulation in Germany," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 74(3), pages 816-834.
    5. Min Zhou & Bing Kuang & Min Zhou & Nan Ke, 2022. "The Spatial and Temporal Evolution of the Coordination Degree in Regard to Farmland Transfer and Cultivated Land Green Utilization Efficiency in China," IJERPH, MDPI, vol. 19(16), pages 1-16, August.

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    More about this item

    Keywords

    Agricultural Land Market; Farmland; Rent-or-Buy Decision; Discrete Choice Experiment; Present Value Model;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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