Persistence of sub-urban agriculture and landowners' behavior in the population declining phase: Case of the preferential tax treatment for rental farmland

Abstract

With the majority of the world’s population residing in urban areas, particularly in vast suburbs, land use control around the suburbs of large cities is a concern for not only protecting agricultural productivity but also maintaining a decent residential environment. A practical policy measure to address this concern is providing preferential tax treatments to landowners who lease out their farmland, and the Production Green Land (PGL) Act is a typical example, which was extensively revised by the Japanese government in 2018 to conserve farmlands and allow active farmers to use it effectively amid the overall population decrease. Previous studies have extensively focused on identifying factors to encourage persistent agriculture in the urban growing phase. However, the appropriate combinations of specialization, diversification, attributes, and location of farm businesses in the shrinking suburbs, where leasing farmland has become a practical option for farmers. Moreover, multifunctional value is important for ensuring that agriculture continues as a family business. Studies on the attributes of suburban landowners who keep farmland and provide multifunctional value to the community are also limited. Based on the above understanding of the literature, this study explores the specific farm attributes and locations related to the persistence of suburban agriculture. To this end, this study conducts a two-wave survey of suburban farmers, including smallholders in the Tokyo Metropolitan Area. The following key findings are observed. First, the continuity of agriculture in the suburbs is significantly related to farmers’ diversification activities in terms of sales channels and provision of services, with specialization within a business type in terms of agricultural operation also being an advantageous factor. Meanwhile, regarding the location, the probability of continuing agriculture is lowest in moderately populated suburbs. Second, landowners engaged in multifunctional agriculture that is linked with the community tend to hold farmland rather than convert it even when they stop or downscale their agricultural activities. Third, regarding the policy implication, the number of exiting and downsizing farmers was larger compared with expanding farmers, in addition to an unbalanced geographical distribution. Based on the findings, the study recommends that multifunctional agriculture through forming relationships with the community should be encouraged, new entrants to agriculture must be promoted, and active farmers who expand farm size need to be supported.