Does COVID-19 Affect Farmland Prices? How and Why?

COVID-19 has profoundly impacted the global economy, particularly the agricultural sector. However, relatively little attention has been paid to the relationship between COVID-19 and the farmland market. A few descriptive studies have speculated about the impact of COVID-19 on farmland prices but presented no quantitative evidence. This study provides quantitative evidence on the causal effect of COVID-19 on farmland prices using the difference-in-differences method with population-based data on farmland transactions in Taiwan. While prior descriptive studies argued that increased farmland prices associated with COVID-19 were largely driven by macroeconomic conditions, we found that the onset of COVID-19 increased farmland prices by 5.1%, even after controlling for macroeconomic conditions and parcel-level farmland characteristics. Furthermore, we found that government payments are likely responsible for these increases in farmland prices. Financial assistance easing the economic burdens of the agricultural sector can also stabilize farmland prices.