University of Washington
Geography 207, Winter 1998
Lecture 13:  Location Principles for Land-Extensive Activities
 

SYSTEMS  OF  AGRICULTURAL  PRODUCTION
Understand the basic distinctions among and within each of the major categories below, from the text book’s pages 237-261.
Subsistence or peasant agriculture

  • shifting cultivation
  • pastoral nomadism
  • intensive subsistence agriculture

    • Commercial agriculture
  • mixed crop and livestock
  • dairy farming
  • grain farming
  • cattle ranching
  • Mediterranean cropping
  • horticulture and fruit

    • Socialist agriculture

    Understand the definitions of these often-used terms:  truck farming;  milkshed

    What are the basic trends of U.S.  agricultural production, demand, and employment?  [See page 257, Figure 5.17 and Table 5.3]


     PRINCIPLES  OF  AGRICULTURAL  LOCATION

    Question:  Can we expect the market to allocate land rationally among the many competing uses for land?
    Answer:  Yes, if we allow the various users of land to compete by offering land owners as high a rent as each user can afford.

    This will mean that any differences in land quality or accessibility will be reflected in the rent paid for the land.  The rent paid because of the quality or accessibility of land is the economic rent.

    economic rent:  “the monetary return from the use of land after the costs of production and marketing have been deducted”  [S & deS: 563] — higher for more productive land, higher for land whose output is easier to market.

     [Note that the purchase price of land is merely the capitalized rent it could receive over time.  Also note that landowners who are also land users are assumed to want to use the land to get as much profit as possible, or to rent it out to someone who will pay as high a rent as possible].

    Let’s assume that all farmers in a given area must get their products to a central market before they can receive any money for their farm products.  They will pay more for land near the market, because their transport costs would be less.
    [Note that we must be talking about commercial agriculture, since subsistence agricultural products are consumed by the grower, not marketed]

    Land that is farther from the market can still be useful, until the cost of transporting the product to market exceeds the profit from growing and selling the product.
    The text book gives a very clear explication of this process, with respect to agricultural land use, pages 264-266.
    See Figure 5.25

    Note the key assumption:  competition among farmers for land near the market center drives up the rents demanded for this land, until the rents are as high as farmers can pay and still pay for the costs of production and transportation.

    Okay, so this determines the rent paid for growing a particular crop, as a function of the distance from the market.

    This also determines the rent paid for growing different crops, as a function of the

    [transparency of competing land uses]

    Q:  How do these lines differ?  A:  By y-intercept and by slope.

    Q:  What determines the y-intercept — the rent paid for land at the market?
    A:  The profit per acre of land, which is a function of how much is produced per acre, and the profit per unit of the crop.

    Q:  What determines the slope — the degree to which the bid rent declines with increasing distance from the market?
    A:  The cost of getting the products of the land to market, which is a function of how much is produced per acre, and the cost of transporting the product.

    R = E (p - a) - Efk
    where
    R = maximum rent that a particular agricultural use can pay at a particular point, in dollars/acre
    E = output (a measure of intensity of use), in tons/acre
    p = market price (a measure of value of the crop), in dollars/ton
    a = production cost, in dollars/ton
    f = transport cost, in dollars/ton-mile
    k = distance from the market center to the point in question, in miles.

    What is this equation saying?
    (p - a) is the profit to be made per ton of output, in $/ton.
    E (p - a) is the profit to be made per unit of land, in (ton/acre)($/ton) = $/acre.
    Efk is the cost to transport the output from the given point to the market, in (ton/acre)($/ton-mile)(miles) = $/acre.

    The equation is saying that competition for land will bid the rent for a parcel up to the difference between (a) the profit to be made per acre of land, before transport costs and (b) the cost of transporting the product to market.
    This is the same thing as Figure 5.25 is saying.

     
    To revisit the example from the Stutz & deSouza text (p. 265), the units and numbers work out if we make the changes noted in red: 

    R= location rent per unit of land 
    E = output per unit of land 
    k = distance to the market 
    p = market price per unit of output 
    a = production cost per unit of output (including labor and basic profit) 
    f = transport rate per unit of distance and output 

    Thus, if we assume that a wheat farmer 20 kilometers from the market obtains a yield of 1,000 metric tons/km2, has production expenses of $50/ton, transport expenses of $1/ton-km, and receives a market price of $100/ton at the central market, the location rent accruing to 1 square kilometer of the farmer's land can be calculated as follows: 

    R = 1000 tons/km2 ($100/ton - $50/ton) - 1000 tons/km2 ($1/ton-km) 20 km 
    R = $50,000/km2 - $20,000/km2 
    R = $30,000/km2 
     
    Note that the rational landowner will rent to the highest bidder.  Note that the bids of some farm uses will overshadow the others, but that this situation varies with distance from the market.

    Note that, at some distance from the market, there are no crops (or animals) that are so land-extensive and so easy-to-transport that it is profitable to grow (or raise) them.  This is the spatial margin of agricultural production.
    (In reality, there may well be another market that results in increasing rents, beyond this point).

    [transparency with the same use at different intensities]
    Note that this idea works for the same crop or production, grown at different intensities.
    Also note that the point of transition is where the two bid-rent curves cross (not where a given land-use’s curve goes to zero).

    Does this work in “real life”?
    See Figure 5.31, which generates agricultural land-use zones in the U.S. based on simple assumptions.
    Compare Figure 5.15, which generalizes the actual pattern of agricultural cropping in the U.S.

     Emphasize the basic way these location models are conceptualized.

    1) Identify key characteristics that distinguish economic activities or sectors:

    2) Distinguish places based on their provision of these characteristics: 3)  Assume competition in the market for land, so that rents rise to the maximum possible for each point:  each parcel is sold or rented for the use that can provide the greatest return.  The landowner gains the economic benefit of a “good” location (location rent);  the land users earn the same profit regardless of location.