Market Power in Agricultural Land Markets: Concepts and Empirical Challenges

This paper provides review about challenges and opportunities to assess and quantify market power in agricultural land markets. Measuring land market power is challenging because the characteristics of this production factor hinder the direct application of familiar concepts from commodity markets. Immobility, fixed availability, and large heterogeneity of land and potential users contradict assumptions of fictitious point market for homogeneous goods. Moreover, the use of concentration indicators for policy assessments is hampered by two problems. First, defining the relevant regional size of the market is challenging and concentration indicators are not robust with regard to market size and number of actors. Second, high concentration of land ownership or land operation may point at potential market power, but it may also be the result of an efficient allocation of land due to structural change in agriculture. The aforementioned challenges are illustrated with a case study for the Federal State of Brandenburg in Germany. Using available data for land sales, a regression analysis reveals a negative relationship between land use concentration and farmland prices. This result can be interpreted as an indication of market power on the buyer side in agricultural land markets. However, it is hardly possible to translate this finding into recommendations for land market regulations because the evaluation of the potential misuse of dominant positions in land markets requires a case-specific analysis. Providing evidence for the exertion of market power in land markets is extremely complex and deserves further attention from researchers and politicians.

Aggregate Efficiency Dynamics in Lithuanian Dairy Farms

In this paper, we attempt to identify the major groups of decision making units (dairy farms) contributing to the aggregate efficiency change. We also suggest identifying influential peers in order to gain more insights into possible development strategies within a sector. The empirical application focuses on specialist dairy farms in Lithuania. The farm-level data cover the period 2004-2016. The results indicate the presence of structural changes and resulting shifts in the aggregate efficiency. Based on the results of decomposition of the covariance term and identification of the influential peers, two models can be followed by Lithuanian dairy farms, namely “pure” family farms with lower operational scale and large farms involving hired labour.

The Economic Well-being of Farm Households in Germany

In this study, we explore the economic well-being of farm and nonfarm households in Germany. We applied an indicator that combines households' disposable income and net wealth consisting of financial assets and real estate to data from the Income and Consumption Survey (EVS) 2018. We found that the income available to farm households can support a standard of living equal to that of nonfarm (employed) households. Wealth affects households' economic well-being in both directions: farm households and workers/employees would be better off if their household income would assess their economic status. The opposite trend occurs for unem-ployed and pensioners/retirees. However, the analysis of farmers' well-being requires income data of multiple years regarding the income volatility of self-employment in agriculture. Consid-ering wealth to assess farm households' economic well-being means paying attention to their farm assets because they are highly intertwined with the household. The EVS misses farm char-acteristics and a reliable number of farmers' observations to assess their economic well-being over time to derive agricultural policy implications. Hence, there is currently a lack of statistical data and evidence to achieve the Common Agricultural Policy (CAP) 's second objective to pro-vide income support in a targeted manner.

Verringerung von Ammoniakemissionen durch Gülleansäuerung auf dem Feld: Teilnahmebereitschaft von Landwirten an Förderprogrammen

Im vorliegenden Artikel wurde mithilfe eines Discrete-Choice-Experiments bestimmt, welche Faktoren die Entscheidung von Landwirten beeinflussen, an einem hypothetischen Förderprogramm zur Ansäuerung von Gülle bei der Feldausbringung teilzunehmen. Bei der Gülleansäuerung handelt es sich um ein in Dänemark verbreitetes Verfahren zur Minderung von Ammoniakemissionen. Die Merkmale aus den Choice-Sets bildeten die Eigenschaften des Verfahrens (Emissionsminderung), der Finanzierung (Erstattung der zusätzlichen Kosten) und der gesetzlichen Regelungen (mindestens anzurechnende Stickstoffmenge, Erlass von Auflagen der Düngeverordnung) ab. Die Auswertung der Befragung erfolgte durch ein Mixed-Logit-Modell und die Schätzung latenter Klassen. Insgesamt zeigte sich eine sehr hohe Bereitschaft an möglichen Förderprogrammen teilzunehmen und das Verfahren zu nutzen. Die Entscheidung für die Gülleansäuerung wurde positiv von der zu erwartenden Emissionsreduktion und der Erstattung der zusätzlichen Kosten beeinflusst. Auch das Angebot, Gülle nicht einarbeiten zu müssen, wirkte sich positiv auf die Teilnahmebereitschaft aus. Die Vorgabe, den zusätzlich enthaltenden Stickstoff in der Düngebedarfsberechnung anzusetzen, senkte die Bereitschaft der Teilnahme.

Automated Calibration of Farm-Sale Mixed Linear Programming Models using Bi-Level Programming

We calibrate Linear and Mixed Integer Programs with a bi-level estimator, minimizing under First-order-conditions (FOC) conditions a penalty function considering the calibration fit and deviations from given parameters. To deal with non-convexity, a heuristic generates restart points from current best-fit parameters and their means. Monte-Carlo analysis assesses the approach by drawing parameters for a model optimizing acreages under maximal crop shares, a land balance and annual plus intra-annual labour constraints; a variant comprises integer based investments. Resulting optimal solutions perturbed by white noise provide calibration targets. The approach recovers the true parameters and thus allows for systematic and automated calibration.

Public Preferences for Pasture Landscapes and the Role of Scale Heterogeneity

The paper investigates the influence of different model specifications for interpreting the results of discrete choice experiments when investigating heterogeneous public landscape preferences. Comparing model specifications based on the Mixed Multinomial Logit and the Generalized Multinomial Logit Model reveals that the parameter estimates appear qualitatively comparable. Still, a more in-depth investigation of the conditional estimate distributions of the sample show that parameter interactions in the Generalized Multinomial Logit Model lead to different interpretations compared to the Mixed Multinomial Logit Model. This highlights the potential impact of common model specifications in the results in landscape preference studies.

The Impact of Dietary Changes on Agriculture, Trade, Environment and Health: A Literature Review

Animal-source foods are a major component of global diets and are increasingly criticised because of their adverse impacts on environment, climate and health. A shift in diets towards plant-based foods is a discussed option to overcome these problems. Much of the scientific emphasis so far has been on estimating the potential of such a dietary change to reduce greenhouse gas emissions and improve health outcomes while less attention has been attracted on studies analysing the impacts on agricultural markets. This paper aims to provide a comprehensive overview and, therefore, summarizes existing studies on the effects of a reduced consumption of animal-source foods on agricultural markets, greenhouse gas emissions, food security and health. In addition, available studies on the so‑called rebound effect are presented. The identified studies suggest that a reduction in the consumption of meat in the EU or OECD would lead to a 1‑10% decrease in meat world market prices, depending on the magnitude and particularities of the assumed dietary changes. This would translate to a 3‑10% reduction in production. The lower domestic demand for meat could also negatively affect welfare outcomes and GDP. However, it has to be mentioned that these studies do not take into account the consequences of improved environmental and health conditions. In fact, our review indicates that reductions in greenhouse gas emissions could generally be proportional to the magnitude of plant-based diets. The maximum reduction potentials of 60-70% could be found for global vegetarian or vegan diets. However, some studies indicate that a shift in food expenditure towards other resource-intensive goods could lead to a rebound effect. Further, this overview suggests that environmental and public health objectives might be in alignment as all identified studies indicate that a reduction in meat consumption in high‑income countries could be associated with lower rates of mortality and non-communicable diseases. This overview reveals the complex relationships between food demand, agricultural supply, international trade, environment, health and food security.

Beyond Cost Minimisation: Farmers’ Perspectives on the Adoption of GM Fodder in Sweden

Swedish farmers were surveyed about their perceptions of genetically modified (GM) feed. Livestock in the EU are frequently given feed containing imported genetically modified (GM) crops, with GM fodder often being cheaper for farmers. However, there is also a growing market for ‘GM-free’ animal-based products. While public concerns about GMOs have been studied extensively, less is known about farmers’ views. The limited literature on farmers and GMOs tends to focus on the economic factors influencing their adoption. The present study contributes the perspective of farmers as members of the general public, thus including a broader set of factors known to be relevant for the public perception of GMOs. The results indicated that farmers were worried about: i) unforeseen consequences for the environment, ii) un­foreseen consequences for human and animal health, and iii) the dominance of multinational companies. Farmers who could expect their farm businesses to benefit from existing GMOs were more positive, whereas those who were unlikely to experience any benefits or who could expect their farm business to be adversely affected were more negative. Nevertheless, adherence to a broader set of positive or negative values suggests that Swedish farmers’ perspectives on GMOs go further than pure considerations of farm management.

A Primer on p-Value Thresholds and α-Levels – Two Different Kettles of Fish

It has often been noted that the “null-hypothesis-significance-testing” (NHST) framework is an inconsistent hybrid of Neyman-Pearson’s “hypothesis testing” and Fisher’s “significance testing” that almost inevitably causes misinterpretations. To facilitate a realistic assessment of the potential and the limits of statistical inference, we briefly recall widespread inferential errors and outline the two original approaches of these famous statisticians. Based on the understanding of their irreconcilable perspectives, we propose “going back to the roots” and using the initial evidence in the data in terms of the size and the uncertainty of the estimate for the purpose of statistical inference. Finally, we make six propositions that hopefully contribute to improving the quality of inferences in future research.

Development of Supply Curves for Biodiversity Offsets on Agricultural Land – a Case Study from the Stuttgart Region

Impacts on nature and landscape are to be offset in accordance with different nature conservation acts in various European countries. In Germany in particular, biodiversity offsets can also be made in advance, for instance, by booking them into eco-accounts, and then allocating them to an intervention. In Baden-Württemberg, these offset measures are assessed in eco credits in accordance with the Eco Account Regulation (ÖKVO). As a means of income diversification, farmers can voluntarily implement offset measures on their land, and then generate and sell corresponding eco credits. Using a geodata-based model, the potential for implementing biodiversity offsets on arable land – areas with major eco credit potential – is analysed from an economic perspective. The Stuttgart Region is a steadily growing conurbation in south-west Germany. It serves as a study region since the loss of farmland due to large-scale construction measures and the related offsetting are a major issue here. In the analysis, the gross margins of the crops grown, their yield capacity, the associated standard land values and the costs of possible offset measures are used to determine the net present value of the arable land at parcel level. From a theoretical point of view and depending on the market price for eco credits, there is a significant potential for offset measures on arable land. Production-integrated compensation (PIC) – an extensification of arable land use – is less economically viable than the conversion of arable land into grassland or its utilisation for nature conservation. There are major spatial disparities between the city of Stuttgart and the surrounding districts. The implementation of biodiversity offsets is not economically viable at a price of less than € 1.00 per eco credit in the city of Stuttgart. By contrast, in surrounding districts, offset measures may be economically viable and implemented on a large scale for less than € 0.30. This is particularly relevant as the districts concerned are located in the same natural area as the city of Stuttgart and the eco credits can, therefore, be attributed in the event of interventions. Based on derived supply curves, decision-makers can see the scale of additional costs of biodiversity offset measures if they are implemented in a spatially restricted region. The analyses presented here can help decision-makers to more easily weigh up the desired natural characteristics and economic effects in the context of agricultural land.