Evolution of Land Rent Theory and its Significance for the EU Agriculture

The economic globalisation process makes the economic factors rotate faster. As a result transaction costs of global system functioning increase and a coordination mechanism is needed - especially in agro-food sectors. There exists a crucial question whether a land factor is still capable to generate economic rents which would 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, monetarists assumptions are becoming insufficient, while on the other hand, the land factor gains new environmental applications and there is still a hope that land rents have its origins in a real value. This paper aims at presenting the evolution of the land rents theory starting from classical economics. One makes an attempt to find the most adequate conception of land rent creation at present day, searching for new sources of comparative advantages in the institutional factors. One argues that Ricardian land rents are vanishing and the institutional rent is the only durable economic rent in the European agricultural sector regarding chosen direction of the CAP evolution. The institutional rent comes from the reduction of the transaction costs by contractual integration process in agro-food sector that however requires a retransfer of financial means from the integrator to the farming producers. In the non-integrated structures drainage of value added by the market mechanism intensifies along with the increase of production specialisation and market risk.