A new land rent theory for sustainable agriculture

The agri-food sector is a crucial element of “integrated order”, because its functioning depends on natural resources, especially on the land factor. There exists the crucial question of whether the land factor is still capable of generating economic rents which can be the determinants of comparative advantages. On the one hand, D. Ricardo's land rents are vanishing, H. George's rents are provoking financial crisis, and monetarists' assumptions are proving inadequate; while on the other, the land factor is gaining new environmental applications, and there is still a hope that land rents have their origins in a real value. These premises entitle one to formulate the hypothesis that the productivity of capital in agriculture in Poland is increasing because of intrinsic values of agricultural land. That implies a need to rethink the neoclassical theories of land rent. The main objective of this article is to elaborate a framework of a new land rent theory and to test it. This is done by evaluating capital productivity in agriculture in Poland and comparing it with the land rent value derived from market prices of agricultural property. The falsification of the theory over a long period fails. Meanwhile, the auxiliary assumptions are verified, implying that the new concept of land rent may be a true one.