Économie et Statistique n° 444-445 - 2011Land and agriculture, recent developments
Farmland Prices under Pressure from Urbanization
The dividing lines in the agricultural land market did not change between 1995 and 2010. The distinction persists between a market of leased farmland acquired by farmers in crop-growing regions such as the Paris basin; a market for leisure properties and natural spaces in regions under strong demographic pressure (Mediterranean coast), where small plots are purchased by non-farmers; and two markets linked to livestock breeding (natural grasslands in small rural towns in the traditional dairy-farming regions, and land for mixed livestock farming and granivore breeding in western France). By contrast, the transaction structure has changed, with a decline in transactions and size of plots traded and a rise in nominal prices. The calculation of a price index must take these trends into account. Prices are positively correlated with factors relating to potential farming income such as expected income and location, which may express agronomic quality. But they are also positively correlated with other factors that play a key role in all economic activities: accessibility and land scarcity. They are also influenced by factors unrelated to farming. The demographic pressure in the municipality where the land is situated, the intended use of the land, and the buyer's occupation reflect the competitive forces operating in the land market. Farmland prices are formed in two different ways: in livestock-breeding and field-crop regions, the main determinants are the variables related to farming activity; in regions subject to strong demographic pressure, the most important factors concern urban attractiveness. In the latter regions, the rise in nominal prices is sharply reduced when the radical transformation of the market is factored in. By contrast, in livestock-breeding regions, market trends have partly concealed pure price changes.