A Microsimulation Model for the Agricultural Land Rental Market in Ireland

Agricultural land rental markets contribute towards structural change in the farming sector by offering farmers the opportunity to adjust their farm size without committing to a transfer of land ownership. In Irish agriculture, the share of agricultural land being rented is however, among the lowest in Europe. Many Irish farmers continue to produce output and remain in agricultural employment despite persistently negative market returns. This implies that land-use decisions are not solely influenced by market returns. In this paper, we utilize Teagasc National Farm survey data to analyse the agricultural land rental market in Ireland with a newly developed microsimulation model. This model is compared to an equilibrium model of the land rental market. The microsimulation model has a number of advantages over the equilibrium model in addressing path dependency, the interaction between landowners and tenants and the farm size concentration. The model requires some further refinement in simulating the variability of land rental prices between contracts.