Abstract
A major concern in Japan is the farmland market which is inefficient and which is reaching a state of illiquidity. If one could go by a hypothesis the reason for this inefficiency could be related to the remarkable increase in area of abandoned farmland. In this paper, a model which is commonly known as the ?Cointegration procedure' is implemented to examine the relationship between farmland abandonment and farmland market efficiency. To increase the intensity and depth in this study, two periods are identified which is:
a. Pre-1980, when the farm rents were controlled; and
b. Post-1980, when the rent control policy was abolished. In other words, the commencement of farmland jeopardy.
Results indicate that an improved market efficiency in the farmland of Japan in the latter period (i.e. post -1980) has contributed to the increase of abandoned farmland. It is also a likely estimate that deterioration in the agricultural profitability which was instituted by the reduction of price support coupled with the problems of an ageing agricultural population, have resulted in making it a Herculean task for small-scale farmers who are inefficient in their ability to retain their land. Thus, one can conclude that deviation towards freer markets, for both farmland and agricultural products has triggered out an increase in farmland abandonment in Japan.
