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Abstract
The paper examines the relationship between the cash rent and the shadow value of farmland
to understand the French farmland market. The empirical analysis is restricted to French main
grain crops, namely wheat, oil crops and other grain crops. The sample is an unbalanced
panel of 35,089 observations, that includes 6,089 crop farms which are observed about 5
years each, during the period 1990 -2007. The shadow values of all quasi-fixed assets have
been derived from a restricted variable profit function. The profit function was successively
estimated and tested by three estimation strategies: pooled OLS, one-way fixed effect and
random panel model. However, concluding remarks are based on the results of the fixed
effect model because of its statistical significance. The result indicates that the shadow prices
of land and labour were persistently diverging from there observed price. The average
shadow value of farmland was estimated about 550€/ha/year which is five times higher than
the average rental price of 112€/ha/year over the studied period. Implication for the
behaviours of French farmland market has been drawn from this analysis.