The paper aims to analyse the effect of different types of buyers on farmland price formation. The buyer-specific price effect is theorised to originate in differences in buyers’ bidding potential, intrinsic farmland and side valuation, as well as in non-uniform terms of trade. We specify a flexible hedonic land pricing model that allows for differences in buyers’ valuation of land characteristics. Data on 579 land sale contracts from five districts of the Czech Republic from 2008-2010 are utilised in the study. The results provide strong evidence of buyer-specific valuation of land productive and intrinsic characteristics, as well as land market conditions. Non-agricultural buyers are observed to significantly overbid agricultural buyers on land location, rather than productive qualities. The geographic and demographic characteristics of areas in which non-agricultural land buyers invest suggest gradual future outmigration from most underdeveloped rural areas. Among agricultural buyers, joint stock companies and cooperatives enjoy major land price discounts, while individual private farms and partnerships face land market access constraints. This observation has important implications for future land allocation and land use efficiency.
Curtiss, J., Jelínek, L., Hruška, M., Medonos, T., Vilhelm, V.
German Journal of Agricultural Economics, 2013, Vol. 62, Issue 2, 116-133, ISSN 0002-1121