220 WHEAT PRODUCTION IN NEW ZEALAND 



3. Rent. 



Remembering, then, that expenses of production are 

 to be taken as the money costs of the various efforts and 

 sacrifices which are required in making the commodity, 

 an analysis of the various costs to be taken into account 

 in estimating cost of production can be considered. 

 Not only must the costs of "putting the crop in" and 

 "harvesting" it be accounted for, but all subsidiary 

 costs such as transportation, distribution, and marketing 

 must receive consideration. Perhaps the most frequently 

 misrepresented item is rent, and this quite apart from 

 the controversy over the length of time for which rent 

 must be calculated. A lengthy analysis of the conception 

 "economic rent" is not necessary here, but it may be 

 stated briefly in order that no misunderstanding will 

 arise in regard to the position taken up. 



Economic rent in regard to land means the surplus 

 produce of any tract over and above that of the least 

 productive soil, which pays no economic rent, and pro- 

 duces for the same market. It is a payment for a 

 differential advantage, and in regard to land this 

 differential advantage is superior fertility or greater 

 proximity to the market, or a combination of these.* 

 Now, it is important to notice that rent is a phenomenon 

 of price but not a cause of high price. This can be 

 established by considering the origin of economic rent 

 in the superiority of certain soils over others in fertility 

 or proximity to the market. A higher price will always 

 bring into production inferior soils, and thus the rent on 

 the other groups will rise. It is quite clear that this is 

 a result of the high price and not a cause of it. The 

 statement that the high price of land renders wheat 

 growing unprofitable is misleading because of this. 

 What is the cause of this high price? Surely one of 

 the most important factors in recent years is the extra- 



*For an analysis of economic rent the reader is referred to 

 a text-book on ' ' Economics ' ' by Marshall, Taussig, or Chapman. 



