222 WHEAT PRODUCTION IN NEW ZEALAND 



of facilities for communication, and the general pros- 

 perity which is a resultant of this. These three elements 

 together constitute rent as that word is used in current 

 speech. The departure from this use of so common a 

 term would give rise only to confusion, and therefore 

 we accept the current use. From this point of view 

 rent in part must be included in our estimate of cost 

 of production in fact, it is a very vital part of it; for 

 in New Zealand the price of land has reached a relatively 

 high level, and the farmer, desirous of obtaining land 

 near a large centre, finds this a serious obstacle to over- 

 come. With highly improved land as dear as 40 per 

 acre, and very often dearer, it is at once obvious that 

 not a little of gross receipts goes in the form of rent.* 



4. The Difficulties of the Problem. 



Having cleared up these initial difficulties, we are 

 ready now to proceed directly with our investigation. 

 But before doing so, it will be well to point out a few 

 of the difficulties which will be encountered, and which 

 will probably affect our result, though not wholly destroy 

 its efficacy for the purpose for which it is being devised. 



In the first place, there is the obstacle arising from 

 the lack of reliable data not an uncommon obstacle in 



*This high price is due to several factors, all of which tend 

 to augment rent as that term is used in current language. In 

 the first place, there is the payment for capital invested in 

 improvements, an element which is of great importance in New 

 Zealand. Secondly, there is the increase in value due to general 

 progress in communication and transportation facilities, and 

 the increase of population, which gives to good lands a scarcity 

 value. Thirdly, the anticipation of profit from a given line 

 of action increases the price of land, and rent often includes 

 interest on the additional capital invested in the land on this 

 account. Finally, all super-marginal lands have a high value 

 owing to differential advantages in production, due to either 

 superior fertility or more convenient situation. This gives rise 

 to pure economic rent, which, while entering into price, is itself 

 governed by conditions which determine price, and is really a 

 phenomenon of high price. 



