Commercial Agriculture and Market Forces:

The Von Thünen Model

Chapter 10 section 10

Terms/Concepts

• Agribusiness• Von Thunen Model• Government subsidies

Commercial Agriculture and Market Forces

• Agribusiness– The system of commercial farming found in the

developed countries

Von ThÜnen

• Von ThÜnen model– explains

importance of proximity to market in the choice of crops on commercial farms.

– Johan Heinrich Von-Thünen

According to the model, later modified by geographers, a commercial farmer initially considers which crops to cultivate and which animals to raise based on market location.

Productivity challenges

• The experience of dairy farming in the United States demonstrates the growth in productivity.– Increased yield per cow (dairy farming) has

tripled.

• Commercial farmers suffer from low incomes because they are capable of producing much more food then is demanded by consumers in developed countries.– Surplus leads to low incomes.

Productivity challenges

• Surplus (greater yield per area of land) is produced because of efficient agricultural practices– new seeds– Fertilizers– Pesticides– Mechanical equipment– Management practices

Government subsidies

• Subsidy = a grant or contribution of money• U.S. government has 3 policies to address the

problem of excess productivity– Farmers are encouraged to avoid producing crops

that are in excess supply.– Government pays farmers when certain

commodity prices are low.– Government buys surplus production.

• Sells or donates it to foreign governments• Developed countries: encouraged to grow less food• Developing countries: struggle to increase food

production

Terms/Concepts

• Agribusiness• Von Thunen Model• Government subsidies