EU Land Markets and the Common Agricultural Policy

74 | LAND SALES MARKETS IN THE EU5.3.1 Agricultural commodity pricesAs suggested by land market theory and in line with previous studies, wefound that agricultural commodity prices are one of the most significantdrivers of agricultural land prices (see Table 5). Yet in France, whereagricultural land prices are heavily regulated, there is practically nocommodity price impact on agricultural land values.Prices of agricultural outputs, i.e. of the commodities produced, canchange farmers’ decisions about whether to invest in more land. Risingcommodity prices can make farms more profitable and the general opinionof the experts interviewed is that commodity prices have a markedinfluence on land prices.Turning to country-specific results, we found that in Belgium, bothinput and output prices are decreasing in agriculture (Figure 38). Duringthe period 1990–2005, real output prices dropped by 33%, whereas inputprices only fell by 12%. Since 2005, both input and output prices have beenon the rise and in 2007 they again reached the level of 2001.Prices for arable crop products increased more than did those forlivestock products or fruit and vegetables. More precisely, in 2006 the cropand milk product prices began an upward trend and by the end of 2007they reached the level of the early 1990s. The prices for meat products didnot follow this upward price trend.In France, the revenue from farming has fluctuated considerably overtime. As shown in Figure 45, despite the CAP 1992 reform (which reducedinstitutional prices for cereals and beef meat), real farm incomes per workergrew between 1991 and 1998 mainly as an outcome of the compensation forprice support cuts by direct payments and high productivity gains (see forexample Boussemart et al., 2007).Off-farm employment is increasing among French farms. In 2003,part-time farms accounted for 32% of French farms, against only 25% in1997. The share of non-agricultural income in the total household income offarms climbed from 25% in 1997 to 40% in 2003.The German data show that prices for agricultural commodities fellcontinually between 1991 and 2005 and then rose sharply, among otherreasons, because of the soaring worldwide demand for agriculturalcommodities. According to the experts interviewed, the increases incommodity prices led to increasing sales prices for agricultural land. That