Farmland Consolidation by Plot Exchange : A Simulation-based Approach

Abstract

This paper quantitatively examines by simulation the extent to which plot exchange can consolidate fragmented farmland. We first show that individual, decentralized, one-to-one plot exchanges, which are currently conducted by some leading farmers, cannot accomplish sufficient consolidation. This is because occurrences of "double-coincidence-of-wants" necessary for voluntary exchange are too few. We then propose a collective, centralized approach, based on the top trading cycle algorithm by Shapley et al., in which many farmers simultaneously exchange plots. This approach mitigates the restriction of "double-coincidence-ofwants" and can raise the consolidation rate to more than twice that of the individual-decentralized exchange. We also find that the consolidation rate improves dramatically as more farmers participate in the exchange. Our results suggest that it is essential to attract as many farmers as possible and to conduct collective and centralized allocation of plots in order to attain better consolidation.

The role of formal and informal institutions in farmland consolidation: The case of Shiga Prefecture, Japan

“…In addition, the cultivators must coordinate with other landowners and cultivators by themselves for resolving farmland fragmentation, as the rural community is not involved. Arimoto et al (2016) indicate that individual transactions cannot accomplish sufficient consolidation because the occurrence of a "double-coincidence-of wants," which is necessary for voluntary exchanges, is too rare.…”

Japanese land reform in the new era? Farmers’ wellbeing and sustainable farmland management

“…On the one hand, the state control of individual plots has been carried over as the stream of a ‘leasehold right.’ This stream builds on the ALA that has maintained the conditions advantageous for existing cultivators despite its repeated amendments to relax the tenancy restrictions since the first revision in 1962 (Arimoto and Nakajima, 2010; Imamura, 2003). One such condition is the ‘legal renewal’ by which a contract cannot be canceled or terminated without official procedures (Arimoto and Nakajima, 2010). The leasehold right is associated with this ‘legal renewal,’ allowing for automatic renewal of contracts and thus making formal tenancy arrangements rather rigid.…”

“…On the other hand, another stream free from ‘legal renewal’ has emerged to actively promote tenancy by establishing a ‘use right’ that ceases to be in effect upon the completion of a contract. This allows owners to claim back their farmland without official approval, enabling them to lend their farmland to others without fear of losing the de facto land ownership (Arimoto and Nakajima, 2010).…”