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Economic Analysis: Theory and Practice
 

The impact of green box subsidies to plant growing on agricultural land value

Vol. 14, Iss. 31, AUGUST 2015

PDF  Article PDF Version

Received: 27 March 2015

Received in revised form: 16 April 2015

Accepted: 23 June 2015

Available online: 31 August 2015

Subject Heading: ECONOMIC ADVANCEMENT

JEL Classification: 

Pages: 39-50

Adadimova L.Yu. Volga Region Research and Development Institute of Economics and Organization of Agro-industrial Complex, Saratov, Russian Federation
adadimova@inbox.ru

Polulyakh Yu.G. Volga Region Research and Development Institute of Economics and Organization of Agro-industrial Complex, Saratov, Russian Federation
adadimova@inbox.ru

Subject The article addresses the nature of green box subsidies in the sphere of plant growing. The focus is on the support, which is unrelated to farm production and aimed at maintaining the certain level of profitability that would be sufficient to retain production factors in agriculture (land, labor, capital, entrepreneurial abilities). We propose to consider, analyze and use this type of support as an economic rent.
     Objectives The study aims to describe the nature of green box subsidies; define their role in agricultural land value increase; analyze State aid in the agricultural sector; specify the definition of the term economic rent; and show a possibility to identify the green box subsidies in plant growing as an economic rent.
     Methods We perform a comparative analysis of the concepts of green box subsidies and economic rent to reveal their identity.
     Results The study traces a connection of green box subsidies with land rent and land value. We have underpinned the possibility to identify green box subsidies as an economic rent, developed a mechanism to determine the size and to distribute grants in this areas between factors of production.
     Conclusions It is necessary to take into account the State financial support to agricultural goods producers when assessing the market value and the cadastral value of agricultural lands through reviewing the existing techniques and procedural guidelines.

Keywords: support, income, plant growing, economic rent, agriculture

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