Vol. 14 No. 2 (2025)
Full Research Articles

From subsidy to land rent: how production-linked payments shape factor remuneration in agriculture

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  • Adrian Sadłowski
Adrian Sadłowski
Cardinal Stefan Wyszyński University in Warsaw, Poland
DOI: https://doi.org/10.36253/bae-16734

Published 2025-02-20

Keywords

  • agricultural subsidization coefficient,
  • capitalization of direct payments,
  • conversion rate of payments into land rent,
  • financial support for agriculture,
  • production-linked payments

How to Cite

Sadłowski, A. (2025). From subsidy to land rent: how production-linked payments shape factor remuneration in agriculture. Bio-Based and Applied Economics, 14(2), 67–78. https://doi.org/10.36253/bae-16734

Copyright (c) 2025 Adrian Sadłowski

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

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Abstract

The paper aims to recognize the mechanism by which production-linked payments stimulate the inputs of production factors in agriculture and the mechanism for transforming subsidies into remuneration for production factors. The study is theoretical, and the research methods used are economic modeling and marginalist analysis. It was demonstrated that production-linked payments change the allocation of resources compared to the allocation that results from the market mechanism, as well as influence the amount and structure of remuneration for production factors in agriculture. A decomposition of the remuneration of production factors was performed. This comprehensive approach to evaluating the impact of these payments, taking into account the side effects of using this instrument, represents a contribution to the literature. The proposed model can be applied to support the design of agricultural policy instruments, policymaking decisions concerning the selection of tools for achieving established objectives, and academic education in agricultural economics.

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