The Impact of Subsidies on the Farmland Rental Rates

Krasimira Kaneva

Abstract: The article discusses the leasing relationship and the rental market in Bulgaria in comparison to EC member states. It is interesting the share and dynamics of the amount of leased land, the ratio between rent and land prices, their relation with the amount of subsidies, etc. Results show that: Bulgaria is among the countries with the highest share of the leased land; the average rent is higher than the EU average; the rental rate growth in Bulgaria is the highest among East European countries; Agricultural cooperatives are the legal form that pays the highest average rent; The highest rent is paid in regions with advanced production of cereals and oil crops. Depending on the type of land use, the rent is the highest for fields. The rent-to-price ratio is highest for vineyard, followed by orchards, fields and permanently grassed areas. In common, the rent-to-price ratio is relatively high, but it is decreasing due to the anticipated increase in the price of the fields. Conversely, in the case of orchards, the rental rate growth exceeds the increase in the price of land. Direct SAPS subsidies are less than the rent paid on a farm, but both have the same growth rate. The increase in the total amount of subsidies has a positive effect on the rent increase, which is confirmed statistically. The change in gross output has no significant impact on the rent.

Keywords: regression model; rent; subsidies

Date published: 2018-06-18