Incorporation of Agricultural Management and Land Rental: Analysis Using Municipal Panel Data

As corporation farms are more capable of achieving business expansion and management improvements than other farms, the Japanese government has developed systems to enable these entities acquire farmland rights. This study utilizes municipal panel data from the Census of Agriculture and Forestry to evaluate the impact of incorporation of farming entities on farmland rental. An empirical analysis is conducted using the fixed effect model and the instrumental variable method. The estimation results show that farmland rental is more advanced in municipalities with a higher proportion of incorporated management entities. This finding suggests that institutional reforms that support corporate management entities to acquire farmland rights facilitate farmland consolidation.