Impact of post-2013 CAP reform on land markets: evdence from farm surveys and farm-level modellng D. Vagg 1 F. Bartoln 2 M. Puddu 1 M. Ragg 3 1 Unversty of Bologna, Department of Agrcultural Scences, Bologna, Italy 2 Unversty of Psa, Department of Agrculture, Food and Envronmental, Psa, Italy 3 Unversty of Bologna, Department of Statstcs, Bologna, Italy IATRC Symposum conference Productvty and Its Impacts on Global Trade Sevlle, June 2-4, 2013
Outlne Background Objectve Methodology Results Concluson
Background (1) Connecton between polcy, other context varables and land markets s at the core of the polcy debate Proposal for CAP post 2013 Regonalsed payment Dsentanglng sngle farm payment Basc payment Greenng Payments for LFA Payment for young and for small farm
Background (2) Large lterature on polcy effects on factor market effect of agrcultural prce supports on the factor returns and on ncome dstrbuton (Floyd, 1965 ) Polcy mpact on the supply/elastcty of producton factors or substtuton (Goodwn et al. 2005; Latruffe et al., 2006 ) Estmaton of polcy captalsaton effects nto land value or land rental prces (Caan et al. 2006; Latruffe et al. 2009 ) Polcy change mpacts on the reallocaton of productve factors (Galko, et al., 2009 and Bartoln et al., 2011 ) Effects of alternatve CAP polcy or ex-ante evaluaton on future agrcultural polcy (Klan et al., 2008; Zer et al., 2010; Bartoln and Vagg 2011) Change on land operated strategy/land use and determnants (expanson/reducton) Change on land tenure and determnants Dstrbuton of payments between benefcares, and enttlement exchange
Background (3) Analyss of polcy mpacts on land markets and land use Mathematcal programmng models Drectly as change on farm sze change/land use change under dfferent prce/polcy/cost scenaros Wthn a farmers nvestment behavour models change under dfferent prce/polcy/cost scenaros Econometrc models applcaton of statstcal to address the effects of past polcy mechansms on the amount of land markets transactons Identfy stated ntenton and determnants on farmers decsons on land use /land market assumng future polcy scenaro
Objectve To assess mpact of regonalzed payments on the land market n the Provnce of Bologna (Italy) Paper ams to contrbute an ex-ante to potental effects of the adopton of regonalzaton to explore dfferent ways to ntegrate very detaled farm level nvestment model output and survey nformaton n more smplfed farm models
Methodology - General To jont nsght from survey carred out n the provnce of Bologna (Italy) to understand the effect of ntroducton of regonalsaton payment through stated ntentons modellng smulaton exercse n the same provnce modellng component bulds based on prevous paper: Identfcaton of margnal value of productve factors under alternatve polcy scenaros (Bartoln et al., 2011) extendng and revsng farm household nvestment model to smulate the demand curve for land under dfferent polcy scenaros (Puddu et al., 2012).
Methodology stated ntenton Survey durng year 2012 Telephone ntervew 350 farm households out of 7379 CAP benefcares n Bologna provnce proportonally stratfed by Alttude locaton (mountan, hll, Bologna hll, plan) amount of CAP payments receved n 2011 (below and above the mean) Farm structure, payments receved and ntenton about operated land strategy under alternatve polcy scenaros Health check CAP untl 2020 (baselne) CAP post 2013 scenaro (regonalsaton)
Methodology smulaton model (1) Smulaton of the mplementaton of regonalsaton payment scheme regme Startng from regonalsed model developed by Caan et al., 2012 we apply a smple proft maxmsaton model to smulate changes n land operated Max s f A, wth x SFPe ra e E and e A Equaton used to calbrate model under baselne scenaro (hstorc payment mechansm)
Methodology smulaton model (2) Applcaton of Regonalsaton model Payments per ha (no constrants on enttlements) Captalsaton effects measured usng metamodel from Bartoln et al., (2011) 58% = SFP value coupled to the margnal value of land (per ha) Land demand functon f(a,x ) calculated by nterpolaton of the smulaton results n Puddu et al. (2012) Land areas and SFP per farm, collected n the survey Land rental prces collected through expert ntervew TC effects on the land market Applcaton of Dennger et al., (2008) and Bartoln and Vagg (2013) max s f, A n n A x RP A I A A r tc out out I A A r tc
Results survey (descrptve statstcs) Alttude Farm d_own d_r-out d_r-n (#) (#) (#) (#) plan 222 209 13 76 hll 56 49 2 27 hll (BO) 36 32 3 9 mountan 36 35-5 all 350 325 18 117
Results survey (descrptve statstcs) Alttude Land operated (ha) rent-out (ha) rent-n (ha) mean sd medan Mean mean plan 36.18 132.82 10 0.64 6.99 hll 37.84 40.68 23 0.54 7.16 hll (BO) 43.67 90.60 8.50 0.75 4.39 mountan 20.78 21.92 13.50-2.28 all 35.63 111.05 12 0.56 6.26
Results survey (descrptve statstcs) Alttude SFP ( per farm) SFP ( /ha) mean medan sum mean plan 9152.03 2200 1.436.869 241.62 hll 3058.74 1400 143.761 100.03 hll (BO) 12582.2 2000 314.556 168.25 mountan 1515.96 500 42.447 57.88 all 7539.43 1800 1.937.633 188.75
Results Survey (Stated ntenton) Stated ntenton wth the ntroducton of regonalsed payment (assumng all other varables reman constant to 2011 condton) Change ntentons wth respect baselne Stated Intentons Land owned Rented-n Rented-out ncrease 32 32 10 no change 182 177 187 decrease 5 10 1 other 131 131 152 total 350 350 350
Results Model (1) Baselne (Hstorcal SFP) Regonalsed payment Regonalsed payment per zone Total gross margn (Meuro) 5.991 6.509 6.892 Margnal land value ( per ha) plan 600 744 789 hll 350 509 542 Bologna hll 350 506 404 mountan 200 372 251
Results Model (2) CT value area All farm farm_reg farm_zreg plan 222 82 72 hll 56 20 18 hll BO 36 6 17 mountan 36 14 10 0 all 350 122 117 plan 222 144 95 hll 56 36 22 hll BO 36 18 18 mountan 36 25 17 15% of rent all 350 223 152 plan 222 211 171 Hll 56 48 39 hll BO 36 25 22 Mountan 36 36 33 30% of rent all 350 320 265
Dscusson Ths work s affected by several lmtatons A key lmt of ths work s the current uncertanty about the Cap reform (now stll n phase of negotaton) Model too smplfed not ncludng specfc techncal constrants, land uses and technologes Results are partcularly affected by the homogenety n slope of the demand curve (due to data lmtatons) Transacton costs, the model cannot be deemed to fully ncorporate obstacles to land transacton Model overestmate change compared to realty
Concluson Both approaches show a reacton of the land demand under regonalsed payments Regonalsed payment seems be more captalzed nto the land value Regonalsaton would cause ncreased rental prces Overall agrcultural ncome would beneft from regonalsaton due to a more effcent allocaton of land) The reacton s strongly nfluenced by the prevous hstorcal system of dstrbuton of payments. The dfference n hstorcal payment and hypotheses about calculaton of regonalsed payment affect strongly the outcome Revsed the model after reform s approved & add new nstruments (eg. greenng ) Model can be better specfed Accountng for a wder range of farm features, such as labour avalablty and specalsaton Extended terrtoral model (rather a model of land trade wthn the farms of same zone) Use of a dynamc model ( better account for adaptaton) More realstc specfcaton of spatal nteractons (eg. dstance and neghbourng effects)
Thank you for your attenton fbartoln@agr.unp.t
Results survey (descrptve statstcs) Land operated rent-out rent-n Farm Alttude (ha) (ha) (ha) d_own d_r-out d_r-out # mean sd medan Mean mean # # # plan 222 36.18 132.82 10 0.64 6.99 209 13 76 hll 56 37.84 40.68 23 0.54 7.16 49 2 27 hll (BO) 36 43.67 90.60 8.50 0.75 4.39 32 3 9 mountan 36 20.78 21.92 13.50-2.28 35-5 all 350 35.63 111.05 12 0.56 6.26 325 18 117
Results survey (descrptve statstcs) Land operated rent-out rent-n Farm Alttude (ha) (ha) (ha) d_own d_r-out d_r-out # mean sd medan Mean mean # # # plan 222 36.18 132.82 10 0.64 6.99 209 13 76 hll 56 37.84 40.68 23 0.54 7.16 49 2 27 hll (BO) 36 43.67 90.60 8.50 0.75 4.39 32 3 9 mountan 36 20.78 21.92 13.50-2.28 35-5 all 350 35.63 111.05 12 0.56 6.26 325 18 117
Dscusson Ths work try to use survey and modellng nformaton to assess nvestgate regonalsaton mpacts model results confrm the results from the survey farms are nterested n sellng/buyng land n opposte drectons n the area n case of regonalsaton hgh level of no changes n the survey, whch s normal when comparng modellng results wth actual ntentons, reveal that any change would occur at least much more gradually than ndcated by the model Both survey and modellng results are bascally consstent wth the prevous lterature, n terms of stated reactvty to polcy reforms and drecton of changes. Ths s also due to the fact that the model desgn s largely theoretcally-drven.