Financialization of agriculture through purchase of farming land
2018
Franc-Dabrowska, J., Warsaw Univ. of Life Sciences (Poland). Faculty of Economics
The objective of the study is to determine whether financialization of economy through purchase of farming land is taking place − and thus, whether investors purchase farming land to secure their cash surplus. No studies have been conducted in this regard, leaving a gap that needs to be filled. The study, presented below, is the first attempt to determine whether it is possible to speak of farming land as a resource subject to the phenomenon of financialization. It was found that the phenomenon of financialization in agriculture through purchase of farming land does exist. It is not possible to determine the exact scale of this phenomenon; however, it is noticeable that purchase of farming land was observed in the recent years. One of the factors that encourage investment in farming land over the long-term perspective is undoubtedly the constant − so far − tendency of increase in land prices. If the investor decided to purchase farming land several years earlier, they may consider this investment satisfactory, when a need arises to release the funds. Land is a good factor, securing the funds invested against the effects of inflation. In addition, due to its rarity, the value of this resource increases over time. An additional factor that encourages investment in farming land is the scale of aid from the European Union, connected with ownership (or at least lease) of land. This is probably an argument, which increases the real value of profit (return) on investment in farming land. In this situation, it seems that the phenomenon of financialization of economy is also taking place in agribusiness due to purchase of farming land for investment purposes.
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