1. Von Thunen

2. Some Assumptions made by farmers on what they are going to farm: A farmer is worried about two costs: 1. Cost of the land and 2. Cost of transporting the product. (of course the farmer is worried about other things such has yield and climate and disease) A farmer will grow a crop that will sell for more than the land costs. Also considered is the distance to the market – transporting each product is different. Farms that are located closer to their market tend to select crops with higher transportation costs per hectare of output, whereas more distant farms are more likely to select crops that can be transported less expensively.

3. Productivity of land is not the same everywhere (for the same type of produce). Agriculture competes with other land uses and users. Markets for agricultural products are geographically dispersed. Because agriculture is spatially dispersed, transportation costs are a significant factor in its location logic. Key element of competition is over proximity to the market.

4. Why does proximity matter: direct costs of transport perishability risk of damage Technology can alter the equation ‘Good’ agricultural land is good for different uses.

5. Below is a simple scenario on how land will look like depending on what is grown and assuming the Market is at the geographic center. This is the theory developed by Von Thunen.

6. The Scenario below shows how a river can change the pattern.

7. Von Thünen Model Von Thünen’s model shows how distance from a city or market affects the choice of agricultural activity in (a) a uniform landscape and (b) one with a river.

8. How Geography can change the agricultural pattern

9. Von Thunen and Rent Economic Rent = p – c. This is the simplest look at rent, the object is to break even or lower p or c (depending if you are the producer or consumer). p = price per unit of output c = cost per unit of output Location Rent = Q(p-c) – Qfk. This is rent derived from location. Q = Quantity produced per unit of land f = freight rate per unit of output k = distance to market Von Thunen’s model was also incorporated into the concept of how rent can be determined for land.

10. Bid Rent is a geographical economic theory that refers to how the price and demand on real estate changes as the distance towards the CBD increases. It states that different land users will compete with one another for land close to the city centre. This is based upon the idea that retail establishments wish to maximize their profitability, so they are much more willing to pay more for land close to the CBD and less for land further away from this area. This theory is based upon the reasoning that the more accessible an area, the more profitable it is going to be. When the cost gets too high certain land uses drop out.

11. Von Thunen and Agricultural location

12. Look over these next few illustrations and see if you can understand them!

17. Real World Modifications: Land is not uniform – mountains, rivers etc. Climate is not uniform Soil and Vegetation is not uniform Countries level of development – eg. Infrastructure Fuel Costs Government Policies – eg. - Crow Rates (straight line) – Government subsidy to try and reduce transportation costs - discounts, build better and faster transportation networks etc. Overall government subsidies to control output and cost. To help farmers in hard economic times – eg. Tobacco farmers in Ontario.

18. The End!