Agriculture in Economical Relations

Relations in the agriculture, the role of the rent.
Теги: топики
Автор: Ирина Нестерова ✔ 02.03.2018

Нестерова И.А. Agriculture in Economical Relations // Энциклопедия Нестеровых

Transition to market relations, variety of land property forms, development of a competition brings significant changes to forms of management in agrarian sector of manufacture. The main purpose of these changes to create effective system of agrarian relations, to increase manufacture of agricultural production, to provide the industry with necessary raw material. But realization of the given purpose in many respects depends on how we will manage to use features of the land as the basic mean of production in agriculture as these features influence on processes of manufacture, distributions, exchange and consumption.

Agrarian relations

natural resourses

Agrarian relations – it is a component of economic relations which develop in agriculture in connection with possession and use of the land as the main mean of production in agricultural branch.

The land as the main mean of manufacture in agriculture, as against means of production in the industry, has a number of features. In particular, any branch of a national economy doesn’t depend on natural and climatic conditions in such measure, as agriculture. It is caused by use of the land in manufacture as a specific, artificially non-reproducible mean of production, differing on fertility and site. The land under condition of its rational use not only doesn’t lose the useful properties, and these properties, on the contrary, even can improve, that will lead to growth of land value.

Close dependence of the land on natural and climatic conditions, a seasonal character of its use at cultivation of agricultural production cause also a rhythm of work of the enterprises of process industry.

Specific character of the land as a mean of work consists also in the following; the land is simultaneously a subject of work. To specific biological forms of the basic productive funds of agriculture belong: industrial cattle, wood, fruit, berry and other cultures; original circulating capitals are seeds, young growth on feeding, forages and so on. For agriculture low rates turn of productive funds (owing to short seasonal use) and a high capital intensity of manufacture, and also a significant break between the working period and time of manufacture (reception of an end result) are typically. The big dependence of agriculture on natural conditions predetermines the necessity of insurance funds creation from a drought, high waters and other natural cataclysms [1].

Agrarian relations are closely connected with the land property. In Ukraine the problem of the land property is solved in view of all subject’s interests of management on the land – the state, collective farms and farmers. According to these subjects the following land property forms are allocated:

  • private (for farmers and those, who conducts a part-time farm);
  • collective (for collective farms);
  • state (for the state enterprises).

The mechanism of the land privatization allows peasants to define: to take the land in a private property or to refuse from it; to work in own farm or in collective. At the first stage of land privatization the distribution of the collective – farm lands is carried out. At the reception of the land ration the certificate on the property right to this land area is given out to the peasant. At the second stage there is a self -determination of peasants concerning the forms of management on the land, the order of privatization lands. Thus two ways of the order of own land sites are used: or own farm is based, or the privatized land can be transferred in rent to other physical or legal persons for economic use for the certain rent. The proprietor also can betray the land in rent to the collective agricultural enterprise (CAE), to economic company and so on. Thus the peasant, becoming a member of cooperative society, doesn’t lose the land property and is its full co – owner. Such mechanism of land privatization is directed on revival at peasants of original owner feeling, of interest creation in the best, most rational use of land sites.

The collective agricultural enterprises – are voluntary associations of citizens in the independent enterprises with the purpose of common use of agricultural production.

An economic basis of such form of management is the collective property on the basic and turnaround means of production, monetary and property payments of its members, on industrial production. At each enterprise there is a share property fund of its members. It includes cost of the basic and turnaround productive funds, which are created due to activity of the cooperative society members.

rights of agricuktural collectives

The rights of the collective of the agricultural enterprise

The economic base of rural farms is the private property on the land and other means of production. The farmer independently determines the directions of the activity, specialization, organizes manufacture of agricultural products, its processing and realization, which independently solves all economic problems. The farmer has the right to enter in contractual relations with any legal and physical persons.

So features of reproduction in agriculture are determined, firstly, by the specificity of manufacture process in this branch and by the agrarian relations, which are caused by the land features.

The category of the land rent – is a general economic category. It has arisen with the advent of the land property. The various forms of the land rent correspond to the various steps of society development.

The rent – is the economic form of the property realization on natural resources. Therefore changes of property relations cause new forms of the land rent to a life.

Distinctions in fertility and a site of the land areas to commodity markets affect on efficiency of its use as the object of management, causing differentiation of incomes and accordingly rent.

The differential land rent exists in two forms: the differential rent I and the differential rent II.

The reason of occurrence of the differential rent I – limitation of the best and average lands on fertility that forces to use also the worse on quality sites of the land. Similarly is a situation with sites, which are located on different the distances from the market. Thereof public market cost (the price of balance), so, the prices on agricultural production are determined by conditions of manufacture on the worse on fertility or the lands or mostly remote from the market (in the industry in a basis of market an average costs are taken, socially necessary conditions of manufacture). Otherwise interest of the land owner and the tenant to conducting agriculture on the worse lands is lost, as the normal conditions for the expanded reproduction will not be provided on it. But limitation of the land as a major factor of manufacture in an agriculture generates necessity of use also the bad land areas on quality. On the best and average lands on fertility the additional net profit is created, which gets the form of the differential rent I.

Thus, a condition of occurrence of the differential rent I are distinctions in fertility and a site of the lands. A source of the differential rent I – wage labour of agricultural workers or farmers [2].

The price of production, made on the worse grounds, acts as the public price, and the price of manufacture for the best and average lands as the individual price. The public price appears above individual. The difference between them also makes the differential rent I, which tenants of the best and average land areas pay to land proprietors.

In conditions of a public land property the differential rent I should be withdrawn by the state. In conditions of a private land property it is appropriated by the land owner in the form of a rent.

In conditions of a rational agricultural production additional capital investments in land areas provide not only an economic return, but also the reception of the superfluous income, which gets the form of the differential rent II. It is appropriated by the farmer or the tenant of the land during the action of the lease agreement. At the conclusion of the new contract the land owner, as a rule, takes into account made by the tenant the last years additional capital investments, the increased fertility of the land and increases a rent for the land. From here discrepancy of interests of the tenant and the land owner. The tenant is interested in the conclusion of the contract for more long term and the land owner on shorter.

In many countries the part of the land is situated in very favorable soil, climatic conditions that promote cultivation of citron, valuable grades of grapes and so on. As demand for such production usually exceeds the supply, that’s why the prices are established much above cost, which is monopoly prices. Therefore payments, a payment for the land on these sites should be higher.

Representatives of neoclassical direction of the economic theory allocate the income, received with the owner of the separate factor of manufacture (in this case the land) as a result of introduction of advanced agricultural technique on an extent concerning a short interval, in conditions of limitation of the supply of the given factor on the part of competitors and an establishment thereof the higher price. If the volume of the supply on the part of competitors grows (in fact they also introduce new technical equipments), the price is reduced and this income, which is received with the owner of the separate factor of manufacture disappears.

The absolute rent – is a form of the land rent, which the tenant should pay to the proprietor for any site of the land irrespective of its fertility and a site. It is the economic form of realization of monopoly of a large private land property. A source of the absolute rent – surplus of additional value above the average profit (a difference between market cost of agricultural production and the public price of manufacture).

The process of land transformation in goods has both the positive and negative sides. Formation of the high-grade land owner, a real private land property, long – term rent of the ground is positive. The negative sides – are an opportunity of concentration of a significant amount of the land in shadow financial structures and a gamble by the land areas; the land transformation into the goods can lead not to formation of the real owner and the owner, which will work on the land, and also to capitalization of agrarian relations that contradicts the tendency of overcoming of workers alienation from the land.

The price of the ground is directly connected to rent relations. In many countries of the world the land is an object of sale and purchase. But it is the special goods, as the land is a product of the nature and work initially is not spent for it. If to abstract from expenses of work for improvement of quality of the land, the land price is based not on its cost, but on size of the income, which it brings to the owner, to the rent. It means that if to put the money received for the sold land in bank, they should be repaid as percents, equal to the land rent. Therefore the land price (the capitalized land rent), is determined under the formula:

PL=R 100%, where R – rent, Bp – bank percent. (Bp)

Let's assume a site land annually gave the ground rent in 1 thousand dollars. The bank percent under contributions – 20%, then the land price will be 5 thousand dollars. It means that if a site tries to sell for 5 thousand dollars and then to put money in bank under 20% annual, then in one year the received income will make 1 thousand dollars that is equally to the annual land rent.

The AS in economy

On the land price influence different factors such as rates of inflation, dynamics of incomes of farms and so on. The price of the ground in large cities in zones of rest is extremely high [3].

The AS – is a set of branches of a national economy, occupied with manufacture by processing, storage and finishing up to the consumer of agricultural production.

The structure of AS includes the following basic spheres:

  • manufacture of means of production for agriculture and its productive service;
  • actually an agriculture;
  • gathering, preparation, processing, storage, transportation of agricultural production.

Occurrence of AS is caused by development of productive forces of a national economy, by a deepening of a public labour division, by development of STR. Introduction of STR achievements in an agriculture leads to reduction of occupied in this branch, narrows sphere of an agricultural production. So, from the middle of XVIII centuries the share of an agricultural production in gross output of the West countries made about 85%, now in the USA and England it makes about 3%, in France, Italy about 7%, in Japan – 11%. It speaks transition of some agricultural processes (manufacture of mixed fodders and so on) on bioindustrial technologies in borders of new branches allocated from an agriculture and services of infrastructural sphere, which continue it to serve.

To the first sphere of AS concern the branches and the enterprises, making for agriculture technical equipments, electric equipment, building materials, fertilizer, poisonous chemicals, mixed fodders, medicines and so on.

The important place in structure of AS set the branches of the third sphere – industrial and social infrastructures: road and transport economies, the warehouse enterprises, communication, financially – maintenance service, inhabited and cultural – household objects. The most important parts of AS are credit establishments and scientifically – advisory firms, the insurance companies, export associations and so on. The end production of AS – is a result of interaction of branches of all three spheres of interbranch cooperation.

In agriculture of the countries with the advanced market the role of a primary industrial link gradually passes from farmer and country economies to a large agricultural associations and corporations. Except that farms are united in marketing consumer, cooperative societies, credit unions for rendering the financial help, the industrial services of common use and a repair of technical equipment and so on. The seasonal prevalence of agricultural machinery use leads to frequently it is economically unprofitable to buy her it, therefore in the advanced countries has gained its distribution the service engineering – economic maintenance on the part of the technical centers of the large machine – building firms, dealer enterprises (economically and legally independent). The most profitable in activity of dealer enterprises are the rent and hire of agricultural machinery.

The state actively adjusts the activity of AS through the mechanism of the prices, the taxation, a credit policy, granting of grants for agriculture by encouragement of export of agricultural production and so on.

Agricultural integration – is a form of management, in which occurs process of rapprochement and connection of branches of agriculture and industry with the purpose of systematic growth of manufacture and maintenance of effective labour cooperation of workers from the city and village.

In Russia nowadays there were various forms of agricultural integration. In large regions the regional AS is formed. They provide realization of interbranch connections, equation of agriculture and allied industries in the given territory. In the system of regional AS regional agricultural sectors, also various agricultural formations: agrarian firms, agricultural combines and associations, research-and-production systems are created. These forms of integration of agriculture with the industry have a number of advantages:

  • uniform the process of manufacture, purchase, storage, processing of agricultural production and realization of ready products is provided;
  • conditions for association of interests of all participants of AS, their mutual relations and the responsibility for the common work are created;
  • more favorable conditions for introduction in manufacture of scientifically – technical progress achievements are created;
  • the opportunity of the organization of manufacture on principles of effective economy of all resources is created;
  • optimum form of association of territorial and branch principles of management is provided.

The basic directions of increasing of efficiency of agrarian sector in Russia: an intensification of agriculture, improvement of use of the lands, development of material base, support on the part of the state.

Certainly, an increase of efficiency of agriculture depends on reorganization of agrarian relations on the village, transition to various land property forms, development of infrastructure of the village, increase of a level of financially technical base of an agricultural production.


  1. Шишкин А.Ф. Макроэкономика – М.: Владос 2008
  2. Коржакова А.П. Экономическая теория пособие для студентов СГАУ- Саратов издательство СГАУ 2009
  3. Владислав Клочков Чем плоха сырьевая экономика? // URL:

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