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Less‐favoured‐area payments, farmland abandonment and farm size: evidence from hilly and mountainous areas in Japan*

Less‐favoured‐area payments, farmland abandonment and farm size: evidence from hilly and... A direct payment (DP) scheme for hilly and mountfainous areas has been in place in Japan since 2000. This scheme’s objective is to fill the gap in production costs between these less favourable areas and other agricultural locations and prevent abandoned farmland from increasing. Eligible rural communities decide whether to receive DPs, and half of the DP allocation in communities with DPs is distributed for collaborative community activities, with the remaining half allocated directly to farmers. We apply a difference‐in‐differences approach to examine the effect of these payments on farmland use. Using a large farm‐level panel data set from before and after the payments were initiated, we employ a causal framework of analysis with a treatment group and two alternative control groups. We find that the payments led to a slowdown in the increase of abandoned farmland among surviving farms. Moreover, the payments have a marginal positive effect on the operated farm size of surviving farmers. The results imply that direct payment schemes in less‐favoured areas play a key role in maintaining farmland. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

Less‐favoured‐area payments, farmland abandonment and farm size: evidence from hilly and mountainous areas in Japan*

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References (25)

Publisher
Wiley
Copyright
Copyright © 2021 Australian Agricultural and Resource Economics Society Inc.
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/1467-8489.12425
Publisher site
See Article on Publisher Site

Abstract

A direct payment (DP) scheme for hilly and mountfainous areas has been in place in Japan since 2000. This scheme’s objective is to fill the gap in production costs between these less favourable areas and other agricultural locations and prevent abandoned farmland from increasing. Eligible rural communities decide whether to receive DPs, and half of the DP allocation in communities with DPs is distributed for collaborative community activities, with the remaining half allocated directly to farmers. We apply a difference‐in‐differences approach to examine the effect of these payments on farmland use. Using a large farm‐level panel data set from before and after the payments were initiated, we employ a causal framework of analysis with a treatment group and two alternative control groups. We find that the payments led to a slowdown in the increase of abandoned farmland among surviving farms. Moreover, the payments have a marginal positive effect on the operated farm size of surviving farmers. The results imply that direct payment schemes in less‐favoured areas play a key role in maintaining farmland.

Journal

The Australian Journal of Agricultural Resource EconomicsWiley

Published: Jul 1, 2021

Keywords: ; ; ;

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