Von Thunen’s Agricultural Theory

Various physical and socio-economic factors, such as soil, climate, geology, terrain, labor, social customs, culture, government schemes, etc., determine the pattern of agriculture in a given location. Geographers, with the help of this set of conditions, came up with various theories to determine the landuse pattern, crop productivity, and location of agriculture. Von Thunen’s theory on Agricultural location is one of the earliest attempts to reason out the variation in agricultural landuse with respect to distance from the market.

Historical Background

If the pioneer of modern economics was Adam Smith, so was Von Thunen for modern location economics. His experience of owning and running his own estate in Mecklenburg and his observations of similar landuse structures around German villages in the early 19th century, developed into his remarkable work Der Isolierate Stat (The Isolated State) in 1826.

Principles

This theory is based on the concept of Economic rent, which helps in devising farm market distance relationships. Economic rent is defined as the additional profit gained from an area of land above its actual net income. Citing its geographical locational importance Von Thunen described it as “locational rent”. According to Von Thunen, the locational rent and the distance from the market share an inverse relationship.

$$\mathrm{location\:rent\:\frac{1}{\propto}\:Distance\:from\:market\:}$$

Assumptions

Von Thunen’s model was created before the period of the Industrial Revolution, and thus he postulated this theory with limited assumptions.

• There existed a single isolated market at the center of the agricultural region.

• The Agricultural land is homogenous in nature, with equal fertility, lying on a uniform plain.

• The city is the sole market, and the agricultural area is the sole producer and supplier to the city.

• Horses and carts are the only means of transportation.

• The transportation cost is uniform in all directions.

• The transportation cost is directly proportional to the distance.

• Labor costs were equal everywhere.

• The region experiences no depressions or inflations and possesses a static economy.

• The commodities available on the market have a fixed market price.

• The farmers focus only on maximizing their profit and thus act as economic men.

Based on the above stated assumptions, Von Thunen postulates two models.

Model I: Intensity Theory

The intensity of the cultivation of a crop decreases with distance from the market. This is because the locational rent of the agricultural land near the market is higher than the rest of the lands. Since the market price is assumed to be fixed, the transportation cost is the sole determinant of the locational rent. With the increase in the application of inputs like fertilizer, irrigation, and labor, the intensity of production will increase.

Model I: Intensity Theory

From the figure, intensive agriculture is carried out in region A and extensive agriculture is carried out in region B to maximize the profit.

Model II: Crop Theory

Landuse varies with the type of crop and distance from the market. Here, the location is determined by the following factors.

• The Market price depends on the supply and demand of the commodity.

• The Cost of transportation varies according to the nature of the product.

• The Basic cost of production is assumed to be constant for any one good.

• The Yield per unit land.

Therefore, every product will have a different height and slope in the locational rent curve. There can be two cases.

Case A: Varying transportation cost

Two crops, A and B, have the same production cost and yield, but varying transportation costs and market prices. Let A have a higher market price and is costly to transport. Thus, Crop A will be sown closer to the market.

Case A: Varying Transportation Cost

Case B: Varying market price

Two crops, X and Y, have the same production and transportation costs, but differ in yield per unit of land and market price. Let X have a higher yield and a lower market price. Thus, Crop X will be sown closer to the market.

Case B: Varying Market Price

Concentric Zonal rings of Agricultural Production

Von Thunen zoned the area around the market into six concentric ring sequences as follows.

• Market gardening and milk production.

• Firewood and lumber production.

• Crop farming without fallow and pastureland.

• Crop farming with fallow and pastureland.

• Three field system

• Livestock farming

Concentric Zonal Rings of Agricultural Production

Modifications in the Theory

Von Thunen modified his own theory by incorporating two new factors. They are

• A Navigable River

• Another competing smaller city

Criticism

• The Isolated State is nowhere to be found in the contemporary world scenario.

• The geographical area is heterogenous in nature with diversified relief features.

• In the globalized era, the market is supplied with commodities from all over the world.

• After Industrialization, transportation was one of the sectors that underwent rapid development and various modes of transport, and its associated transportation costs were involved.

• Depending on their acquired level of skills, labor cost differs.

• Depressions and inflations are an integral part of a growing economy, and a static economy remains imaginary.

• In the present competitive economy, fixed prices are a mere concept.

Conclusion

Von Thunen has sown seeds on the analysis of thr best use of Agricultural land in the early 19th century with the then available resources and models. The current generation is benefiting from applying his theory with necessary modifications.

Frequently Asked Questions:

What is the main objective of Von Thunen’s theory?

Von Thunen’s theory on Agricultural Location and its landuse, is a deterministic (set of regulations) and normative (based on calculations) approach to explaining the relationships between markets, agricultural production center and transport.

Define the term Economic Rent?

Economic rent is defined as the additional profit gained from an area of land above its actual net income. Citing its geographical locational importance Von Thunen described it as “locational rent”. According to Von Thunen, the locational rent and the distance from the market share an inverse relationship.

What are the concentric zones around the market according to Von Thunen?

Concentric zones include −

• Market gardening and milk production

• Firewood and lumber production.

• Crop farming without fallow and pastureland.

• Crop farming with fallow and pastureland.

• Three field system.

• Livestock farming