A critical determinant of China's long-term economic growth and social stability will be whether the wealth of its economic boom can reach the majority of its 700 million farmers, who make up approximately 56 percent of the total population. The benefits that the rural population has received from the economic reforms of the past two and a half decades, while significant, were largely achieved in the 1980s, and now the countryside lags badly behind the urban sector. A survey we conducted in 17 provinces, among 1,962 farmers and other respondents, confirms one fundamental cause of the widening rural-urban income gap: most Chinese farmers still lack secure and marketable land rights that would allow them to make long-term investments in land, decisively improve productivity, and accumulate wealth.

Farmers in China face multiple threats to their land rights from local government and village officials. The most prominent threat is land expropriation or acquisition through eminent domain to satisfy demands of industrial growth or urban expansion. Despite a series of central laws and policies, in practice, farmers who lose their land typically receive little or no compensation. Closely related as another source of insecurity of land rights is the persistent "readjustment" or "reallocation" of farmers' landholdings that is administratively conducted by village officials. Today, such land-related problems are the number one cause for rural grievances and unrest in China, which reported 17,900 cases of "massive rural incidents" of farmers' protests in the first nine months of 2006.

China adopted a Property Law in March 2007 that aims to strengthen the security of farmers' land rights, and the next key step will be full implementation of the law. We calculate that securing rural land rights would bring more than half a trillion dollars of value to farmers. Implementing the property law requires major institutional and legal measures on several fronts that China must tackle in the immediate future. [More]

Labels: land, law

But the broad strength of commodity prices may also reflect the appeal of the sector as an “alternative asset”, along with hedge funds and private equity. Ever since the dotcom bubble burst, investors have been keen to diversify away from their traditional focus on equities and government bonds. That has led to the launch of a whole series of exchange-traded funds based on commodities, which have made the asset class accessible for a much wider range of investors; the latest example, from Barclays Global Investors, is a fund based on timber prices. And Wall Street has been gearing up to meet demand; a survey by Options Group, a recruitment consultant, found that the hiring rate of commodity traders is up 33% on last year.

The recent credit crunch may have given commodities a further lift. Speculative money that had been flowing into high-yield bonds and structured credit is now looking for a new home. Some commodities, particularly gold, are also seen as a hedge against a declining dollar.

Robin Bhar, a metals strategist at UBS, says investors seem to feel they have an each-way bet on commodity prices. Either global economic growth is strong and supply remains tight, or the world slips into stagflation, as it did in the 1970s. In either case, commodities should perform well. [More]

Labels: land, wealth

1. Investing serious hours at the FSA and extension meetings learning the new program and getting the paperwork done.
   
2. Employment of more farm managers to act on behalf of landowners and select the optimum route.
3. Electing to reside total faith in the tenant via FSA power-of-attorney.
4. Just take a large rent check on 1 March and lose the whole headache.
   

Labels: farm bill, land, production

In spite of the uncertainty, Iowa land ownership and rental arrangements will be
changing in the near future. Almost half, 48 percent, of Iowa’s land is owned by people
over the age of 65 and almost a quarter, 24 percent, is owned by people over the age of 75.
This means there will be a significant amount of farmland changing hands over the next
few years. It remains to be seen whether or not this land comes on the open market for
sale. Regardless of how or to whom the land is transferred, there will be an impact on land
values. Iowa land values and the returns to Iowa farmland will remain as a topic of keen
interest for many years to come. [More]

[my emphasis]

Land transfers are the cutting edge in the structure of landownership and control. Even though the annual turnover in rural land is very slow -- currently 4.6 percent of parcels and 3.5 percent of land -- concerns linger that farmers in the United States are losing control of the resource that is basic to their industry. Small, persistent changes can eventually make a difference, but the data examined here indicate that a transfer of landownership out of agriculture is occurring at an almost imperceptibly slow pace. [More, but ya hafta order it]

• Will longevity trends (especially in previously short-lived males) change this normal rate? [40 points]
  
• Why should future land turnover be any different than the past? (Discuss in paragraph form) [30 points]
  
• Do you know of an flat black 80 I can get for under $5K? [200 bonus points]
  

Labels: economics, land, media

At a dinner I attended in Brussels last week with a small group of CAP reformers, former EU Agriculture Commissioner Franz Fischler shared his experiences of the politics of reform. One of the most interesting things he had to say concerned a study by the OECD showing that barely 25 per cent of traditional production-linked subsidies actually went to farmers. He said this study had been invaluable as he traveled around Europe trying to convince European farmers to embrace his proposals for decoupling farm payments. But a recent clutch of academic studies is confirming the anecdotal evidence that decoupled farm payments are just as leaky as old style production subsidies they replaced.

A new study of land prices and rents in Germany and the United States by by Harald von Witzke, Steffen Noleppa, and P. Lynn Kennedy shows that the problem of land value capitalization is still very much with us in the new era of decoupling. They find that of every euro in subsidy paid to German farmers, two-thirds is passed on to the landowners and conclude that:

The operator is the intended beneficiary of agricultural subsidies in the European Union; however, as we have found, the main beneficiary is the landowner. Therefore, agricultural subsidies must be considered instruments that are poorly targeted to the intended beneficiaries. In fact, the shocking reality is that land rents in the absence of EU farm subsidies would be negative in most of Germany.

This conclusion is consistent with other recent studies into the impact of decoupled farm payments on land values, such as this study by Arathi Bhaskar and John C. Beghin at Iowa State University and this study by Stefan Kilian and Klaus Salhofer at Technische Universität München.

The implications are of even greater concern given the high and rising share of farm land that is rented and not farmed by the owner. The current subsidy-driven rush to biofuels can only make things worse. [More]

Labels: economics, land, policy