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The Economic Vitality of Rural Land Uses Largely Determines Rural Land Values
The study of what determines the land values has occupied economists for more than 200 years (Smith, 1776) (Ricardo, 1817) and has been of great importance as a research topic while one needs to understand how land tends to be a vital concept in economics and is an important asset determining its economic vitality where people have stable businesses and this affects the value of the land (Singh, 2015). Whereas here in the context coming to rural land which is used for agricultural purposes largely determine its value by the crops that these fields can grow. Additionally, today the total area of cultivated land around the world is 12 to 15 percent out of which 50 percent of the land is used for agriculture and most of them are present in rural areas (Ritchie, 2017). Here in rural areas people these lands to live and work upon, to earn their source of income.
Its usually said that rural land isn’t much valued compared to urban land. You see when instead of doing agricultural activities on land started using it for non-agricultural purposes such as housing, commercial, infrastructure, public utilities, and many more it is then categorized as urban land and holds more value compared to the rural one. The core of this essay is to determine what elements affect the land value and does economic vitality plays an important role in it. Moreover, one rural land in Dhanora village present in the state of Uttar Pradesh, India has been selected for the research purpose in relevance to the sugarcane industry. Sugarcane worldwide accounts for nearly 80 percent of global sugar production. Furthermore, the data on this rural land will help us to determine how the health of the land is reflected in farm prices and the implications of that relationship for farmers.
In economics, land means a scarce space for locating economic production activities, infrastructure, and dwellings, as productive soil that provides organic and inorganic materials for agriculture, and it provides its aesthetic value and amenity services. Moreover, one of the three traditional inputs “land, labor, and capital” tells us that land is an important factor and provides insight into the natural environment (Hubacek, 2002). The role of land, its conceptualization, and its measurement in economic theory has subsequently changed over time. Now land prices are determined using the net present value method (NPV) (Feichtinger, 2011). The value of land in the 1920s saw a 245 percent increase and 364 percent in 1957 and 1977 and all this was a sudden spike, maybe people realised the importance of land and valued it according to it ( Gardner & Nuckton, 1979). The people sentiments also affect the land prices. The rural land selected for this essay present in Dhanora village present in the state of Uttar Pradesh, India is the most preferred location. When this land will be converted to an urban one it will impact the value and generate greater market prices. Uttar Pradesh is a major contributor in India to the national food grain stock also important in terms of horticulture is considered and major agricultural products here are wheat, rice, pulses, and sugarcane which serve the purpose of us selecting sugarcane industry. This agricultural land/ farmland is spread across 146,361 square feet and an earlier sugarcane plantation has been set up here and in its near vicinity.
As technological development is taking place at a fast-paced rate the implications of it can also be seen on the rural lands (Verma, 2014). As time passed more technical improvements have appeared in agriculture. From tractors to harvesting equipment to irrigation facilities to air seeding technology this subsequent advancement in agriculture leads to higher yield and increases the rate at which the by-products is sold and indirectly affects the land rates in the particular area (Sharma, 2019). The government also helps the rural land and takes out various schemes for them where the implementation of new technology helps with their livelihood and has an impact on their land values. As technology can affect the labor market and land use patterns with its widespread the labor-intensive market becomes more technology-driven and thus people lives are affected, they are forced to migrate to other places and this led to lack of economic vitality in that particular area affecting the land values. We can say lack of resources and communication leads to the land being underdeveloped. The technical advancement in the sugarcane industry achieved through the generation of new crop varieties with specific characteristics and the development of new products and by-products has also led to its industrialization. Continuous improvements in harvesting sugarcane in Uttar Pradesh has led to an increase in its rates and the farmers who use them earn enough profits to sustain. However, this also has led to negative environmental externalities like the air quality and emissions which decreases in the value of the area of nearby lands which don’t grow sugarcane.
The value of the land chosen is Rupees 1.5 crore (Rupees 102 per square feet) which is very less compared to other lands present in the same vicinity. Though the land is resourceful and ready to use/build the factors that affect the prices like the approach to the land, people living in that area their businesses, the environment, and no proper commute are the reason for the low price. Though Uttar Pradesh is one of the largest and developed Indian states, the government continues working on highways, rural development, and the industries haven’t been able to reach out to this land. 26.4 percent of the population is still below the poverty line in this state and maybe this is one of the many factors why the price of this land still low. It’s reported that around 39.8 percent of its population is poor and doesn’t have sources to meet their basic needs. The chosen land has many other farmlands surrounding it which are quoted at lower prices, people just want to sell this land to go and settle in cities. They have earned their share by using these lands for agricultural purposes, now to meet greater needs (marriage of children or their educational expenses or to pay back their loans) want to sell this land.
The people who take up loans on their farms or are facing debt problems just to meet their ends have little prospect of economic survival because, on present and expected future rates they won’t be able to meet annual interest and principal repayments (N.Z. SOCIETY OF FARM MANAGEMENT, 1971). The most important criteria are that these farmers who take up the loans will only be able to pay back if they receive final assistance on more liberal terms which however is not possible in the current scenario. And it only leads to the accumulation of these financial debts which in return affect their earning source and leads to degrading in the economic vitality of that area. It is very common in the sugarcane industry the production cost is too high and the yield is low, so it’s commonly seen in this industry that a farmer takes up loans to meet its requirements. All these are because of insufficient profitability of the farms, inappropriate organizational structure of the farm and government intervention in financing decisions (Lerman , 2008), though in India government take out many schemes which are in favor of these farmers and their debts but lack of knowledge, communication, and implementation makes them lack behind. Moreover, corruption is one of the major causes that this happens with farmers, lack of transparency in financing departments becomes an add-on disadvantage and burden for these people. This affects the market economy and the condition of that area.
Rural lands that are touched by the concept of urban settlements come out with extensive costs for the social and economic life of residents. When urban expansion takes place there is a major change in agricultural activities and draws out special attention to land ownership patterns (Farah & Khan, 2016). Also, change in sizes of landholding or ownership happens mostly because of the sale of land for housing schemes, debt, migration, division of land due to inheritance. Now if the land is divided due to inheritance one should understand a collective land can yield more compared to the split ones. Moreover, urbanization is a process where if the rural community starts moving nothing can stop it from happening, also this helps in the increase of land rate as the basic facilities available to people in that are improvises (Surya, 2020). But if it happens due to displacement and migrant workers moving to cities in search of jobs this leads to a decrease in economic vitality. The change of ownership pattern is all because of negative implications and this doesn’t create any positive impact on the rural lands. Though land distribution helps people to have some source of income but again not beneficial for rural land value.
Development of specific agricultural land use patterns and livelihood strategies affected by farm households’ characteristics. Dominant crops like sugarcane, wheat, and certain pulses have a great impact. Farmers who cultivate these crops generate more income compare to farmers who grow other types of crops in Uttar Pradesh. The chosen land in Dhanaura village has great potential but the lack of proper infrastructure by the government has made the land cost less. Moreover, people living in the same vicinity are affected by sugarcane and it is by-products production. The land value over there is very low and no necessary developments have been made to improve it. So, it’s obvious that the economic vitality determined by the people and their business who are above the poverty line affects and is a huge determinant in rural land values. Moreover, the land chosen has been earlier used to grow sugarcane, and the production of such a big plot has affected its vicinity. This might have led to soil pollution and erosion and made the soil infertile; this can be a reason why the land is being sold for less price. Also, this type of plantation requires intensive use of water, heavy agro-chemicals, and leads to discharge and runoff polluted effluent though this helps the farmers to achieve high productivities but ultimately leads to degradation of the land. There should be an integrated approach to the planning and management of land resources.
Sustainability of the development of rural lands is oriented to several environmental, economic and social rescue measures mostly like a balance of green-based ecosystem based on development, to have stable economic growth by restructuring productivity systems to save resources and energy, to have social justice with the distribution of land, to protect the living environment so that there is zero-emission, having a connect with urban areas to meet their demands directly can all have a positive impact on the economic vitality and can increase the rural land value. Moreover, special and careful treatment of the sugarcane industry will help the farmers to maximize their gain, help with environment-related issues, and will have less effect on their and nearby lands. The continuous productivity improvements will help the farmers with their earnings in terms of economic vitality but will have a negative value on the rural land. A proper land use plan should be implemented where the land is used for different kinds and standards are specified and improvised. An integrated and holistic land use planning and management are required with land users placed at the center to improve the livelihoods of people living in rural areas. Moreover, the success of sustainable development not only depends on the people of the rural area but the state government also plays an important role in terms of growth, rural expansion, and infrastructural development.
References for Rural Property Valuation
Gardner, B. D., & Nuckton, C. F. (1979). Factors affecting agricultural land prices. California Agriculture.
Farah, N., & Khan, I. (2016). Changing land ownership patterns and agricultural activities in the context of urban expansion in faisalabad, Pakistan. Research Gate.
Feichtinger, P. (2011). The Valuation of Agricultural Land and the Influence of Government Payments. Factor Markets.
Hubacek, K. (2002). The Role of Land in Economic Theory . nternational Institute for Applied Systems Analysis.
Lerman , Z. (2008). Farm Debt in Transition: The Problem and Possible Solutions. FAO Regional Office for Europe and Central Asia .
N.Z. SOCIETY OF FARM MANAGEMENT. (1971). FARM DEBT AND FINANCIAL VIABILITY. Department of Farm Management and Rural Valuation of Lincoln College. New Zealand.
Ricardo, D. (1817). On the Principles of Political Economy and Taxation. Murray.
Ritchie, H. (2017). How much of the world’s land would we need in order to feed the global population with the average diet of a given country? Our World in Data.
Sharma, N. (2019). Applying modern tech to agriculture. Down To Earth.
Singh, V. (2015). Land Acquisition And Urbanisation. Geography and You.
Smith, A. (1776). An Inquiry into the Nature and Causes of the Wealth of Nations. London: Strahan and Cadell.
Surya, B. (2020). Land Use Change, Spatial Interaction, and Sustainable Development in the Metropolitan Urban Areas, South Sulawesi Province, Indonesia. MDPI.
Verma, P. (2014). Multifaceted Impact of Technology on Rural Development. SSRN.
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