Determinants of agricultural land prices at macro level

Abstract

The subject of this study is average market prices of agricultural land in the EU in 2000–2008. Because of a big variety of agricultural land prices throughout the EU, two major groups were selected for thorough analysis – one with the highest land prices (old member states) and one with the lowest (mostly new member states). Land prices in those groups were tested for the relationship with various macro level factors of economic development or national agriculture using multiple regression analysis methods. Despite differences in scale the analysis revealed similarities in price determination. The analysis of prices in 2000–2002 which represent prices at rather steady stage of price development revealed the key determinants of agricultural land price both for old and for new member states, namely, the GDP per capita in purchasing power standard and density of agricultural labour force (persons) in area utilised for agriculture. Price development curves indicated different behaviour in both groups during the research – the slope of price curves in 2004 in most of the new EU member states changed as they had joined the EU, while the development of prices in old member states continued their previous pace of development. The analysis of agricultural land market prices in old member states during the whole period of research (2000–2008) revealed the following determinants of price at the price growth stage: simple ratio (or more complex expression in some models) of utilised agricultural area to the total area of land, negative influence of higher GDP per capita in some models, density of annual working units (labour force) in area utilised for agriculture (or more complex expression in some models) and the time factor. [...]