Land and Its Rents in the Process of Land Management: An Overview of Poland and Ukraine as Examples

Abstract

The differences in the forms of land rent in Poland and Ukraine are due to the specifics of the historical development of agrarian relations, the level of institutional support, and the condition of the land market in each country. The basis for this substantive analysis was the literature on the subject, primarily concerning the issue of land rent from a historical and contemporary perspective. Relevant legal acts and statistical data characterizing agriculture in the analyzed countries were also used. The aim of the conducted research and analysis was to identify and characterize the types of land rent in Poland and Ukraine. It was found that there are similarities and differences in the occurrence and perception of land rent between the analyzed countries. Not all types of land rent identified in Polish agriculture occur in Ukraine. In addition, those identified in Ukrainian agriculture are not always reflected in the same way in Polish conditions. This is related, among other things, to the historical conditions of the established agricultural system and Ukraine’s remaining outside the European Union. The comparative analysis of land rent types in Poland and Ukraine indicates a shared economic nature but significant differences in the mechanisms of their formation and distribution. Future research on land rents in Poland and Ukraine should be supported by empirical research and comparative analysis of the specific effects of the existence of individual types of rents.

1. Introduction

Land is the fundamental production factor in agriculture. The amount of this resource available in a given farm conditions the possibilities of making investments, implementing innovations, earning revenue from production, or obtaining lease fees when some land is rented. For a farmer, farmland is most often his “workshop”, but for landowners in Poland not involved in farming, it can become a profitable capital investment (land prices increase, landowners receive EU subsidies under the Common Agricultural Policy). Thus, revenue can be gained not only from farming land but also from owning land [1,2,3].

Poland’s geodetic area is 31,272,000 hectares, of which agricultural land (AU) covers 18,696,500 hectares (59.79%). Statistically, there are 0.38 hectares of AU per capita. According to data from the Central Statistical Office, there are over 1.3 million farms in Poland. Just over 40,000 farms have an area larger than 50 hectares, while over 106,000 farms are in the 20–50 hectares range, and 974,000 farms have an area smaller than 10 hectares. This represents 75% of all farms in Poland. In turn, farms over 50 hectares account for just over 3% of the country’s farm structure. The ownership structure of farms in Poland is based on private ownership, which covers over 98% of agricultural land, a result of the political transformations after 1989 and ownership transformations in agriculture. In earlier periods in Poland, the state sector in agriculture was also not dominant (holding approximately 19% of agricultural land in the late 1980s) and varied regionally.

The functioning of agriculture over the last 20 years under the conditions defined by the Common Agricultural Policy and the Single European Market has had a number of positive effects on this sector. Many indicators demonstrate the profound transformation of Polish agriculture. Agriculture’s share of GDP, which hovered around 4.5% in 2004, fell to 2.2% in 2021. This reduced share is the result of the dynamic growth of the entire economy, in which the role of agriculture is slightly declining despite its dynamic development. Investment in agriculture nearly doubled during membership thanks to transfers under the Common Agricultural Policy (CAP). As much as 45% of agricultural investments were made with European Union funds [4]. Changes are visible in the spatial structure of farms and land use patterns. Although the overall pace of these changes is relatively slow and significant disparities in this respect are still visible compared to countries with similar production structures, the direction of these changes should be stimulated by political decisions, including legal ones, and should foster improved sustainable development of agriculture in economic, social, and environmental dimensions. The dynamic development of a relatively small group of farms deserves emphasis, although they simultaneously account for an increasing share of agricultural production and are competitive with agriculture in the most developed EU countries.

According to data from the Central Statistical Office, Poland saw a decline in the number of farms between 2002 and 2020, but the average farm size in 2020 was only 11.3 hectares. In Western European countries, such as France and Germany, this average is six times higher. It should be noted that the figures cited are partially distorted by the failure of the statistical data to account for unregistered leases of agricultural land in Poland on the inter-neighborhood market. This may mean that the actual average size of a commercial farm is significantly larger. Despite the imperfect land structure of farms in Poland, a stable and systematic increase in agricultural production has been recorded since the beginning of EU membership. Commercial agricultural production has increased by an average annual rate of 2.34% since 2004. In 2022, it was 35% higher than at the beginning of the analyzed period. A favorable situation was also noted in the export of agri-food products, whose share in total exports from Poland in 2022 amounted to approximately 14%. The share of Polish agriculture in agricultural production in the EU-27 in 2020 was 6.6%, with labor inputs of 17.6% and land resources of 9.5%, which illustrates the scale of reserves. These reserves primarily consist of labor resources and their low productivity, as well as land productivity, which is still approximately 30% lower than the EU average [5].

The phenomenon of spatial polarization of farms in Poland is visible. This is significant because it points to regional differences in the context of future transformations in the agrarian structure. The relatively low intensity of agricultural production by sector, determined by the capital input-to-land resource ratio, results in relatively low land productivity. This has negative economic consequences for both the agricultural economy and the population directly involved in agriculture (farming families). This indicates the need to continue the deagrarianization process as a basis for the multifunctional development of rural areas and the non-agricultural use of some of the labor resources previously associated with agriculture [5].

According to data from the Central Statistical Office, crop production accounts for approximately 42% of the value of all Polish agricultural production, including cereals (11.4%), vegetables (10.9%), fruit (8.7%), industrial crops (4.8%), and potatoes (3.8%). Cereals account for the largest share of the sown area (approximately 70% of Poland’s agricultural land). Approximately 0.4 million hectares are devoted to permanent crops (primarily orchards). Poland is the largest producer of apples in Europe—3.5–4 million tons annually, of which approximately 1 million tons is exported. Polish agriculture is one of the main producers of soft fruits in Europe (strawberries, currants, raspberries, and highbush blueberries). Approximately 160,000 hectares of land are devoted to vegetable cultivation (almost 25% of Polish agricultural crop production). The most important vegetables in terms of crop area are onions (14.6%), carrots (10.8%), cabbage (9.0%), beets (4.7%), cucumbers (3.8%), and tomatoes (3.6%). Animal production accounts for approximately 58% of the value of agricultural production (milk (19.1%), live pigs (13.6%), live beef (6%), and chicken eggs (5.5%)).

The area of Ukraine is 60.36 million hectares. Agricultural land occupies 42 million hectares, which is approximately 70% of the total area of the country [6]. This figure includes arable land, perennial plantations, pastures, and hayfields. According to calculations per capita, Ukraine has about 0.83 hectares of agricultural land. As of 2020–2021, about 31 million hectares of agricultural land in Ukraine, i.e., approximately 75% of their total area, are in private ownership. The main producers of agricultural products in Ukraine are households and private farms.

Households are producers executing their economic activity for both purposes—self-sufficiency in foodstuffs and production of commodity agricultural output. This category of producers also includes persons entrepreneurs working in the agriculture field. Their activities are determined by the Law of Ukraine “On Personal Farming” №. 742-IV of 15 May 2003 [7]. The area of agricultural land occupied by households in 2020 is 5294.4 thousand hectares, which is 3.9 thousand hectares more than in 2019.

A private farm is a form of private business of a citizen with legal person’s right, who has expressed the wish to produce commodities, to process and sell them with the purpose of gaining a profit. Citizens carry out their activity on land lots, which were placed at their disposal for farming. The activities of private farms are determined by the Law of Ukraine “On Farming” [8], which defines the legal, economic, and social principles of farm creation and operation as a progressive form of entrepreneurial activity in the agricultural sector. The area of agricultural land occupied by farms in 2020 is 4837.2 thousand hectares, which is 1.6% more than in 2019 [6].

State support for private farms and households in Ukraine is carried out within the framework of the Law of Ukraine “On State Support for Agriculture of Ukraine” [9], as well as through a number of special programs aimed at the development of small and medium-sized agricultural production.

The main areas of support include:

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financial support (partial compensation for the cost of Ukrainian-made machinery and equipment; cheaper loans (compensation of interest rates for farmers); financial assistance on a repayable and non-repayable basis for newly established farms; compensation for the cost of seeds, breeding livestock, planting material).

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tax incentives (special taxation regime for agricultural producers (single tax of the 4th group); benefits for paying land tax and rent for state land for private farms).

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programs to support the development of farming (Ukrainian State Farm Support Fund): provides preferential loans and grants for small farmers; programs to support cooperatives (partial reimbursement of costs for equipment and machinery); grant programs within the framework of the eRobota National Project (creation of gardens, greenhouses, processing enterprises).

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support for households (compensation for the cost of milking machines, refrigeration equipment for dairy farms); support for the development of family farms without creating a legal entity; financing the development of livestock farming (subsidies for keeping cows, reimbursement of construction and reconstruction of livestock complexes costs).

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institutional and educational support (advisory services, educational programs, and advanced training courses; facilitating farmers’ access to electronic services through the State Agrarian Register).

The main areas of state support for private farms and households, such as financial, tax, grant, subsidy, compensation, and educational, are presented in

Table 1. State support for private farms and households.

Support Area	Private Farm	Households
Financial support	Compensation for equipment, cheaper loans, and grants through the Ukrainian Farmer Support Fund	Microgrants, soft loans for family farms
Tax incentives	Single tax of the 4th group, land benefits	Possibility of registering as a family farm with tax benefits
Grants and programs	Grants for the development of gardens, greenhouses, and processing (eRobota)	Grants for the creation of family farms
Subsidies in livestock farming	Subsidies for cattle, breeding cattle, and support for cooperatives	Subsidies for keeping cows, compensation for the construction of livestock facilities
Cost reimbursement	Seeds and equipment cost reimbursement	Cost reimbursement of milking machines and refrigerators
Educational and advisory support	Agricultural advisory services, training, and access to the State Agrarian Register	Training programs, access to the State Agrarian Register, and support for advisory services

Source: [9].

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In Ukraine, households dominate the production of livestock products, in particular milk and meat. Thus, in 2020, they produced the following from the total amount of livestock products: milk—70.2%, wool—90.7%, honey—99.0%, eggs—44.9%. Private farms and other agricultural enterprises play a major role in the crop sector. In 2020, they produced the following from the total amount of crop products: grain and leguminous crops—79.6%, factory sugar beet—94.3%, sunflower—87.7%. However, households produce the most potatoes, vegetables, and fruits and berries—98.1%, 84.6%, and 83.2%, respectively, of the total amount [6].

Characteristics of land as a factor in the economic sciences include limited land resources, substitution rate, compulsion of food consumption and its determinants, differentiated land rents, etc. [10,11]. In contemporary economics, rent1 [12] is understood as the surplus in revenue above the costs incurred by employing production factors to perform labor, which aims at generating revenue. Thus, the most common form of rent is profit. In essence, rent is part of the income that exceeds the alternative cost (surpasses outlays needed to maintain, at least over a short time period, the resources as they are being used at the time) [13].

Remuneration for land as a production factor is known as land rent, which can be viewed in two ways. First, the payment for using land can be seen as a fixed price (a lease fee), which is paid by the lessee to the lessor. Second, land rent can be considered as the eventual revenue that remains after paying for production factors, labor, and capital, as well as having covered costs related to the used of goods and services, which are deducted from the total revenue.

While analyzing the theory of factor pricing with regard to land, attention should be paid to the theory of marginal productivity, where it is asserted that in equilibrium every production factor will receive the remuneration according to its marginal productivity measured by the impact produced on the final product by adding or deducting one unit of this production factor while keeping the quantity and quality of the other production factors constant. It is further presumed that an increase in a given production factor without increasing the other factors accordingly will cause reduced marginal productivity of this factor once a certain value is reached, and that its increased use will continue as long as it contributes more to the revenue than to the costs [12].

With respect to the production factor, such as land, this theory is known as the uniform theory of land rent. According to the marginal productivity theory, it is assumed that land as a production factor is completely homogeneous and completely mobile. Thus, this theory does not take into account qualitative differences or the immobile nature of land. Moreover, this theory presumes that land is the only changeable production factor in the market where there is perfect competition. The curve of individual demand for land is convergent with the curve of the marginal product obtained from the land, and the two overlap from the point of intersection with the curve of the average product value. For an individual land user, the land lease price is determined. This arises from the assumption that the land market is perfectly competitive. Under this assumption, it needs to be understood that land lease will not be marginal revenue, but it will be a fixed price. The land user will use the land to the extent where the value of the marginal product is equal to the paid or calculated price for this factor [12].

Due to changing socio-economic conditions, new land rents are emerging, based on historically established land rents, with varying degrees of correlation to previously existing ones. This research gap manifests itself in the insufficient identification and organization of currently operating land rents. Two countries were considered for analysis: Poland and Ukraine, differing in terms of, among other things, the regulation of their economic systems and the functioning of economic groupings. Since 2004, Polish agriculture has operated under the Common Agricultural Policy. This situation implies the existence of both common and distinct land rents in both countries. The aim of the conducted research and analysis was to identify and characterize the types of land rents in Poland and Ukraine.

2. Research Materials and Methods

The basis for the substantive analysis was the literature on the subject, primarily concerning the issue of land rents in a historical and contemporary perspective. In addition to the literature on the subject, the analysis covered legal acts concerning the development of the agricultural land market in Poland (including: The Act on the Management of Agricultural Property of the State Treasury (Journal of Laws of 2025, item 826) [14]. In Ukraine, there is no separate document regulating the agricultural land market; however, certain provisions have been included in the existing regulatory legal documents. For example, the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding Conditions for the Circulation of Agricultural Land” [15], the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine Regarding the Sale of Land Plots and Acquisition of the Right to Use Them through Electronic Auctions” [16] introduces a transparent process of land electronic auctions and obliges to sell state and municipal lands exclusively through such auctions and Resolution of the Ministers of Ukraine “On Approval of the Methodology for the Normative Monetary Valuation of Land Plots” [17]) according to which the normative monetary valuation of the land plot is determined, which is the basis for determining the amount of rent.

When identifying the types of land rents, the experience from previously conducted surveys among farmers on the land market in Poland was also important. External observation and farmers’ opinions facilitated the identification of the types of land rents.

The theoretical and empirical analysis used data from official statistics in both countries (the Central Statistical Office in Poland) and (State Statistics Service of Ukraine). These data allowed for a general characterization of agriculture with the primary land factor in the individual countries analyzed.

The thesis was put forward that there are differences in the occurrence and significance of the types of land rents in Poland and Ukraine. While historically developed forms of rent may be present in both countries, rents determined by contemporary socio-economic conditions may differ significantly.

Similarities and differences resulting from the specific nature of the agricultural economy in both countries were highlighted, in particular, Poland’s membership in the European Union and the inclusion of Polish farmers in CAP instruments (the presence of the EU subsidy pension).

3. Evolution of the Meaning of Land Rent

Previous analyses of the land rent concept, shaped by the history of economic thought, have demonstrated the inadequacy of their assumptions to the current realities of agriculture. Considering the main theories, and simplifying, one can conclude that the Ricardian theory places too much emphasis on the price mechanism, while the absolute rent theory relies on the assumption that all values originate from labor. The function of land in the residual rent theory is reduced to a location factor, while the neoclassical theory argues that rent is the result of market failure [18].

Contemporary land rents stem from historical concepts. Some are indirectly linked, others more directly. This state of affairs has been fueled by, among other things, ongoing changes in the economic systems of individual countries, changes at the level of economic groupings and in the international economy, as well as the assignment of an increasing number of functions to agricultural land (not only as a primary means of production) but also as a multifunctional good, including a public good, a factor shaping the social structure of rural areas, and a location for investments, such as infrastructure.

In the preclassical theory of the 17th century, of which Petty (1623–1682) was a representative, land rent was associated with the value of the product produced on given land and with given labor input. Initially, land rent was not subjected to the law of diminishing returns. It was not differentiated spatially either [19].

Petty maintained that the source of wealth of a country was labor and land. The source of land rent for a landlord was the product produced on the land by the work done by a farm worker, who received only part of the output of his work, in the form of renumeration for work, leaving land rent to the landlord (for the latter, this was an opportunity to gain revenue without labor, i.e., a rent earned from having property rights) [20]. Land rent was treated as an additional product. Any owner of capital could buy land which would provide him with an annual revenue at least equal to the land rent. Thus, land rent was a basis for setting an interest rate [21].

Quesnay2 held a strong view that large-scale agricultural production was productive3, whereas small farms were non-productive as they did not generate pure product [21,22]. In order to obtain a pure product, it is necessary to invest the capital needed to conduct an economic activity (agricultural machines, fertilization, land drainage systems, etc.). This first input of capital entitles landlords to receive land lease rent.

Although the theory was far from being universal, it would be difficult not to appreciate it. One of its followers, Turgot (1726–1781), developed the fundamentals of the law of land’s diminishing productivity based on the notions proposed by physiocrats. He rightly observed that the fertility of land varies. First, the most fertile soils are considered for farming. As fewer fertile fields are subsequently used for agricultural purposes, the same outlays generate lower and lower returns. The productivity of a soil unit is limited, and therefore, a certain point can be reached where additional inputs do not generate any effects [21].

Turgot maintains that every sum of money, every capital, can be expressed in the form of a certain area of land which can be purchased for this amount of money. This piece of land generates a profit which can be expressed as interest on the given sum of money, or on the capital in general. Because the capitalist can gain an income by buying land, he may not be willing to invest capital in another enterprise unless he earns the same returns (regardless of the remuneration for other costs incurred). Thus, the interest is the outcome of the fact that an entrepreneur returns to the lender part of the income that the loaned capital generates in recognition of the lender’s possibilities of earning land rent should the same capital have been invested in land. In the light of this theory, the rate of interest sets a limit on the fructification of capital, i.e., the limit of a profitable use of capital. The significance of this theory in economics lies in the distinction it makes between rent and non-rent employment of capital [22].

Smith (1723–1790) considers land rent as remuneration for the natural fertility of land [22]. According to Smith, land rent is an income derived from land. Smith, however, is inconsistent in his explanation of the origin of land rent. He expresses an opinion that the moment land becomes private property, the landlord collects part of the revenue from agricultural production. In this case, rent is the amount discounted from the product of labor done by farm workers. In another version, land rent is presented as the natural return for the use of land, just like profit is the natural return from the use of capital. Smith also concludes that the underlying reason land rents appear is the monopoly of private land ownership. Prices of agricultural products are high because they are monopolistic. Such high prices allow landowners to exact land rents. Smith also makes a distinction between land rents resulting from land fertility and from land location [23].

The influence of soil fertility on land rent depends on soil requirements and the types of crops cultivated. The dependence between land rent and location means that a higher rent (when two land parcels are the same size and fertility), because of lower transportation costs and higher demand, will be generated by a piece of land located nearer a town. Smith [24] distinguishes rents from particular agricultural products. As the population grows larger, land rent increases because the wages remain on the same level, but profits calculated by dividing the communal revenues decrease per capita [23].

Smith [24] analyses land rent in two cases: 1. when land is used for food production, 2. when land is used for the production of other goods. This division arose from the assumption that every land can be dedicated to food production, which invariably generates the revenue that ensures a minimum rent, because everyone, regardless of their buying power, needs to spend some income on food. As a result, the demand for food is uniquely inelastic. The demand for other goods is more sensitive to prices, and does not ensure that a rent will always be earned. The rent originating from the land on which non-food goods are produced depends, to a large extent, on the size of the market.

Malthus (1766–1863) attributes revenue to land because of the following reasons: 1. owing to its fertility land is capable of feeding a greater number of people than needed to cultivate it; 2. land itself generates a demand for its products because, as proven in the theory of populations, the human population increases by at least the number of people that the land can feed; 3. land suitable for cultivation is relatively rare.

Every land, because of its limited supply, should generate revenues. In this context, land rent is a consequence of both its fertility and its limited availability, i.e., monopoly. Thus, Malthus equated limited availability with monopoly. However, apart from the moment of limited availability, which occurs at any price, this notion of monopoly should also encompass the influence of the producer on price. According to Taylor [22], the thesis proposed by Malthus is incorrect, especially with regard to land, because land is in the hands of many producers, which makes agriculture, among all forms of production, the nearest to perfect competition. Furthermore, Malhus identifies the rent is a difference between the price of a product and the costs of its manufacturing, and concludes that the rent increases when the said difference grows larger, although that difference can increase in response to both an rise in prices and a decline in production costs, for example owing to technological progress, and hence the value of rent, like the value of other returns, is dependent on demand and supply. Land rent can be earned from any land. This is how Malthus formulated the theory of absolute rent, in addition to which he detected the presence of differential rent, which he defined as a difference between the normal rate of revenue on ordinary land and a higher rate on more fertile soils, thus taking into account the unequal fertility of land, which entails situations where identical outlays may generate different returns in different geographical locations.

Jean B. Say (1767–1832) associated the existence of land rent with land ownership. Land contributes to the production of many goods, and land rent is the profit that the landowner receives. Farming typically requires the employment of less capital than other branches of the economy, as a result of which there are many persons capable of conducting agricultural activity, and this creates large competition for land leases. On the other hand, the amount of land suitable for cultivation is limited in every country, whereas the amount of capital and the number of people able to work on land are not limited in mobility. Owning some land generates profits for the land proprietor when agricultural products are in demand (productive capacity of soil has no value when there is no demand for products generated with the use of land—the demand for land as a production factor is a secondary demand in relation to the demand for products generated on this land), and when the supply of land is limited at a growing demand for this resource. There are many economic events that can act in favor of a landowner, e.g., opening a water canal, building a road, increased population, wealth, and welfare in the region [25].

Ricardo (1772–1823) observed that owing to the accumulation of capital in England, the employment rate and demand for food increased, which necessitated the use of less fertile land. The economist perceived land rent as a payment to the landowner, which levels up the rate of returns from land plots that differ in fertility [26,27]. Ricardo’s preliminary assumption was that individual pieces of land are different in fertility, but the price of an agricultural product in the market—assuming there is free competition—is identical. It is possible to obtain more product using the same labor and capital inputs on a more fertile soil than on a less fertile soil. Hence, each unit of agricultural product obtained from a less productive field costs more. As the demand grows and prices rise, less fertile soils are turned into fields, and production is continued up to a point where production costs on less fertile land are equal to the price. If the costs surpass the price, it is no longer profitable to continue production, and if they are less than the price, production will expand, as it is profitable, over less and less fertile lands until the production costs equate with the price [22]. Land more fertile than the worst soil will generate revenue in the form of a difference between the price of a product, i.e., the production costs on the worst land, and the costs of production on a more fertile land. This is the so-called differential rent [22,23]. The differential rent theory is currently reflected in Poland in higher prices of fertile land in good agricultural condition (e.g., Kujawsko-Pomorskie Voivodeship, Wielkopolskie Voivodeship). However, if the price is determined by the production costs on the worst land, then the differential rent is not included in the price and is the consequence of the price rather than its cause because it is not incorporated in the production costs on the worst land, which establishes the price [22].

Cultivation of increasingly less fertile soils entails constantly rising prices of agricultural products, because their market prices depend on production under marginal conditions. Land rent continues to increase constantly, absorbing both the profits of capitalists-entrepreneurs and remuneration of workers, while at the same time diminishing the capital accumulation capacity in industry, coinciding with the rising profits of landlords. It seemed justifiable to propose a theory that rents existed due to the limited resources of fertile land and the law of diminishing returns [26]. Ricardo [27] contended that land rent would not increase if there were more good land than was needed to produce food for the growing human population, or if it were possible to invest capital endlessly into the cultivated land without decreasing the harvested crop yields. The explanation lies in the fact that land rent is invariably created due to the implementation of additional labor, which generates a disproportionally lower income.

Land rent is also determined by the level of prices, but not vice versa (the price of grain is high not because the rent is paid, but the rent is paid because the price of grain is high). It was the limited supply that created the rent due to rarity, and fields with various qualities gave rise to differential rent, treated as a difference between the price of a product (i.e., costs of production on the worst land) and costs of production on the most fertile fields.

Land rent also occurs when production is intensified [22,26,28], in which case rent is perceived from the point of view of production costs rather than a product. Marginal grain production costs increase as the intensity of land cultivation rises. Marginal cost is defined as an increment of the total cost needed to generate an additional quantity of the final product [26]. Intensification is essential whenever there is a limited amount of land coupled with a constant increase in the demand for agricultural products, which can be satisfied only via increased inputs (an isolated farm). Each further input will generate a smaller increment in the production output. Consequently, the costs of products generated with the subsequent inputs will be greater than the preceding ones. Hence, a differential rent will appear, which will be the difference between the price set by the costs of the latest input and the costs of production with the previous inputs. This type of rent relies on the law of diminishing efficiency [22].

In his considerations regarding land rent, Ricardo assumed the presence of free competition and the lack of technological progress, which could temporarily halt the increase of land rent or even decrease its value. The revenue earned from land would be constituted of differential rent. Ricardo claimed that there was no absolute income from land, and there was no absolute land rent. Infertile land, he purported, does not yield any profit. The existing rent is in fact an outcome of the “meanness” of nature, and not the fertility of land [22].

Ricardo did not address the issue of alternative land use [12]. For him, the most important factor that determined the value of land rent was the difference in the quality of farmland. In turn, von Thünen (1783–1850) attributed the existence of land rent to the distance of land to target markets. An important notion that his theory and Ricardo’s concept of land rent have in common is the definition of land rent, which in neither of the approaches is included in production costs, but is seen by both researchers as the ultimate income. Von Thünen discusses economic problems connected with space and distance, and analyses land rent, later referred to as location rent, as resulting from these two aspects. He proves that distance affects transportation costs and, indirectly, prices of goods as well as the location of production factors. The area, on the other hand, bears influence on territorial boundaries between particular goods. It is either profitable or not to deliver certain goods to certain markets [12].

The concept developed by von Thünen provided intellectual stimulation to the perception of agriculture and rural areas in connection with an urban agglomeration (a center) as the focal point of a market system of management [22]. It is only a town that generates industrial products and services while being supplied with agricultural produce and food by farmers. The objective of von Thünen’s model was to distinguish the transportation costs as a linear function of distance from other factors affecting the location of production. The system of agricultural production in relation to the town, according to von Thünen, would have the shape of rings, which would indicate what crops should be located in particular rings, and how intensive the agricultural production should be. The most intensive production was to be located in the innermost ring, i.e., nearest to the town that would be the center for selling agricultural products. Crops that required less intensive cultivation could be grown in the rings further from the town. The cultivation of crops characterized by a high level of intensity in the first ring would be associated with lower unit costs than those cultivated in more distant rings. This model would affect prices of agricultural products and the level of land rent [12,29].

Prices of agricultural products in the town (the central point) would result from the costs of agricultural production and the costs of transportation from the most distant farms, whose production would still be needed due to the volume of demand. Because agricultural products in a given place must have identical prices, as dictated by competition, and transportation costs of agricultural products produced closer to the town are lower than those from the most distant zones, an extraordinary revenue arises, which is the land rent equal to the savings on transportation costs in farms located closer to the market compared with the most distant farms, where the rent will equal zero. This rent can be maximized as a result of the competition between farmers for manageable land, and, as the location of land parcels in relation to the market is constant, the location rent will be relatively permanent [12,29].

Mill (1806–1837) asserted firmly that the rent which land could generate in one use was the cost which had to be borne if the same land were to be put to another use [29].

Marx (1818–1883) also analyzes the issue of differential rent. Unlike Ricardo, he does not consider it to be important whether the process of expanding agricultural production proceeds from more to less fertile soils or vice versa, but crop cultivation must be carried out on soils of varied fertility. He coins the notion of land-capital, implicating the engagement of capital into land, which raises the land’s original productivity, and which leads to the distinction between land rent and lease fee. The lease fee covers the rent and the interest on leased capital. Marx adopts Ricardo’s principal assumption, that prices of products are determined by outlays on marginal land plots. Marx’s model assumption arising from differential rent justifies the distinction of two parts: differential rent I and differential rent II. The researcher assumes the same level of initial labor and capital inputs into individual land parcels. The difference in yields and value of products produced on land plots with higher fertility compared to marginal land is then referred to as differential rent I (expressed in units of weight and in monetary value). In turn, the land rent obtained from a difference due to the technology of agricultural production is identified as differential rent II. Technical conditions comprise, for example, land development and improvement facilities (buildings, constructions, drainage system, applied mineral and organic fertilization, which amends the quality of soil). Their value is reflected by the level of inputs per land surface unit, inclusive of labor, which is known as the level of intensity of agricultural production. The differentiated level of outlays allocated to individual land plots having varied fertility generates unidentical production and financial effects [30,31].

Marshall (1842–1924) distinguished three elements of land rent: 1. remuneration for the value of land in its original form, as “a gift of nature”; 2. the part which is created through land improvement; 3. the part which should be attributed to such factors, as density of population, income per capita and location relative to markets. Marshall put emphasis on the third element, being certain that land rent received by the landowner did not necessarily have to be equal to the value of this land in its original form [32,33].

Marshall introduced a new concept of rent known as a quasi-rent, which consisted of surplus earnings of the producer and consumer [22], and in his considerations, he employed alternative costs, including ones connected with the non-agricultural use of land. In his theory, the key role is played by transfer earnings. What is significant in his model is the assumption that transfer earnings consist of minimum wages, which allow maintaining the supply of land for a specific type of land use. The difference between the actual earnings generated by a given production factor employed in a given way and the earnings it could generate in another, more profitable application is called economic rent.

The problem of rents associated with land as a production factor has remained a valid one until our time. Czyżewski [34] underlines that if land rents do not have roots in actual production processes, they can become an object of speculative trading and trigger destabilization in a market economy. Conversely, if they are conditioned by the productivity of land as a factor, such rents are a determinant of extended reproduction and an essential condition for the development of agriculture.

For example, absolute rent in Ukraine emerged as an economic phenomenon alongside the restoration of private land ownership because of land reform that began after independence in the early 1990s. This form of rent is passive in nature and does not encourage the efficient use of land resources or investment in improving their fertility. Absolute rent provides a minimum guaranteed income to owners but does not contribute to the rational distribution of land and the development of a competitive market. On the other hand, differential rents I and II are more acceptable for Ukraine, as they are based on differences in land productivity and economic efficiency. They are the rents that create economic incentives for the modernization of agricultural production, the preservation of soil fertility, and the sustainable development of rural areas.

The economics literature provides at least two approaches to the category of economic rent originating from neoclassical economics. Economic rent is: 1. an additional payment received by a given production factor, above the transfer earnings, needed to persuade this factor’s owner to employ it in a given area of application; 2. each payment for using a resource of a production factor which exceeds the alternative cost [34].

Economic rent occurs in a situation of permanent rarity of resources (e.g., land) or absence of a chance to evaluate the resource by the market and to include it ex ante in the economic balance. If a resource can be market-evaluated and its relative supply can increase, economic rent disappears and becomes a cost. Theoretically, economic rent cannot be negative, and the process of its formation does not coincide with the time of its execution, so a negative residual income4 from rare resources means the rent is intercepted by other subjects [34].

Pure economic rent is the payment for using a production resource that has a zero alternative cost. A production factor that has only one application will have a vertical or perfectly inelastic supply curve S. The alternative cost of using a resource that has only one type of use is zero; hence, the monetary revenues that are gained from its use are considered to be pure profit or economic rent [12] (Figure 1).

If the demand for a given resource, e.g., land, is D₁, then the price for this resource is P₁, and its owner receives the revenue equal to the field OP₁AQ₁. If the demand for this resource increased from D₁ to D₂, then the price will grow from P₁ to P₂, and the owner’s rent will rise and cover the area OP₂BQ₁. The size of the supply of the given resource remains at the level marked by Q₁.

Land rent is a phenomenon that is not restricted to agriculture but can appear in other areas and involve other production resources. Land does not have to be used solely for agricultural purposes. It may have alternative uses, which generate revenues sometimes higher than those achieved from its agricultural use. Land rent is an important case, historically the oldest one in the general theory of economic rents [12].

The alternative cost of land as a production factor is influenced by a variety of conditions, e.g., differences in quality (productivity) of units of a given resource, issues of location (connected with the distance between the site of production and the site of sale), various abundance of mineral resources, etc. In our time, land rent is created using land as a production factor in the agricultural sector as well as by allocating land plots to set up business enterprises, residential houses, etc., and it is seen as a function of expectations raised by the development of a given area.

A change in the management of farmland5 is decisive for the value of land and acquisition of a new, higher land rent (e.g., in urbanized areas: building rent, a tax levied on land for development). In this case, in Poland, it is also obligatory that the municipal authorities levy the building rent arising from the exclusion of land from agricultural production. In addition, should the value of a land plot increase upon the approval of a local land management plan, the municipality is obliged to establish a single fee, called the planning rent, due to the increased value of a property [35,36].

A review of the subject literature and contemporary economic reality implicates the presence of several types of rents that landowners (lessees) can obtain during the land management process in Poland and Ukraine (

Table 2. Types of land rents present in Poland and Ukraine.

No	Type of Rent	Where the Rent Originates Form
		Poland	Ukraine
1.	Absolute	The difference between the actual revenue generated by a given production factor (land) employed in a given way and the imputed revenue it could produce if brought into production in another, most profitable way.	Due to the existence of land ownership, it always exists in the form of surplus value, appropriated by the state and other landowners through the monopoly of land ownership; obtained from all types of agricultural land; appeared in the early 1990s as a result of land reform, privatization of agricultural land, and the establishment of the rental market, and is now the basic source of income for landowners. Example: even in regions with low fertility (e.g., southern areas of Mykolaiv, Odesa, or Kherson regions), rent remains at a level not lower than the minimum, which indicates the presence of a constant rent income, regardless of crop yields; landowners receive rent as an appropriation of monopoly rights to land, rather than because of labor productivity—this is precisely what reflects the essence of absolute rent.
2.	Land	The surplus of product above labor and capital inputs is brought by the marginal farm (marginal costs are higher than average ones, and the difference is land rent).	A predominantly fixed income received by the landowner from leasing a land plot. Example: landowners obtain the same rental payment regardless of soil quality or productivity; this indicates that income is generated not by the efficiency of land use but by the inherent scarcity of land as a resource.
3.	Differential I	The difference in yields and value generated on more fertile land plots compared with a marginal plot.	The difference between the price of agricultural products on the worst lands and the individual price of production on the best and average land plots. Example: the average wheat yield in the Vinnytsia region is about 6.0–6.5 t/ha, while in the Kherson region it is only 3.5–4.0 t/ha; with the same grain selling price, this means that farms on more fertile land receive additional income of about EUR 205–245/ha, which is a form of differential rent I; rent in the “black soil” regions (Poltava, Kyiv, Cherkasy regions) in 2024 ranged from EUR 120 to 165/ha, while in the arid southern regions it was EUR 60–80/ha, which also indicates the existence of a rent differential due to land quality; land located closer to infrastructure (transport hubs, agricultural logistics centers) has a higher market value and rental rate.
4.	Differential II	The difference concerning technical conditions (land development)—at a given level of inputs into a marginal land plot, it is determined and assumed that inputs would be higher than in the case of more fertile land, and an increment of yields and earnings are thus achieved, and if these increments on particular land plots are greater than obtained with comparable initial inputs into a marginal land plot, then that difference is referred to as differential rent II.	Arises because of additional capital investments in already developed land plots, which ensure an increase in land productivity without expanding its area. Example: according to data from the Ministry of Agrarian Policy and the FAO, farms that invest in irrigation receive an additional net profit of EUR 165–245/ha compared to traditional production without irrigation and this difference constitutes differential rent II; the use of precision farming reduces the cost of seeds, fuel and fertilizers by 15–20%, which increases the profitability of production; farms that have implemented organic production (in the Poltava, Lviv and Kyiv regions) have higher product prices (by 25–40%), which provides an additional profit margin that is transformed into rent.
5.	Quality	Higher yields are harvested (assuming the same outlays) from land with better quality (classified into better soil valuation categories) than from worse quality land in addition to better quality farmland can be cropped with plants crops having higher soil requirements which usually attain higher market prices, e.g., the price of wheat is usually higher than the price of rye (this rent comprises elements of differential rents I and II)—some of this rent is transferred to the local municipal budget in the form of agricultural taxes, which take into account the quality of soil—better quality fields are levied higher taxes.	It is determined by mutual agreement between the parties and depends not so much on soil fertility or management efficiency as on market conditions, the location of the plot, access to infrastructure, and demand from agricultural holdings. Example: the owner of a low-fertility plot in the steppe zone may receive the same or even higher rent as the owner of fertile chernozem in the forest-steppe zone if the land is located closer to a grain elevator or has better logistical accessibility.
6.	Absolute	It appears when all farmland is cultivated, including marginal fields (this rent is earned from all cultivated land the moment the worst class of farmland generates it).	It arises when all arable lands suitable for cultivation are involved in agricultural production, including low-productive or degraded plots where the profitability level is the lowest; this type of rent is generated due to the scarcity of land resources and the institution of private ownership, which creates the necessity to pay rent even for the use of lands of inferior quality. Example: in the southern regions of Ukraine, farmers cultivate saline or arid soils with significantly lower yields compared to the fertile chernozem of the central oblasts; however, rent payments are still required for such lands, as they possess market value due to their limited availability; thus, absolute rent emerges regardless of soil fertility, reflecting the very fact of land ownership as a source of income.
7.	Planning	Future use of land as envisaged in local spatial management plans.	It represents the cadastral value of land and the normative monetary assessment, which are taken into account when determining rent payments and land taxes according to the designated land use; however, in Ukraine, the mechanism of planning rent has not yet been fully implemented due to the imperfection of the spatial planning system and the absence of an integrated link between land valuation and strategies for its future use.
8.	Location	Owing to the location of specific land plot in a given country, region (prices of land in different countries or regions are different), distance to a town, forest, lake, sea, mountains, trading center, roads and railroads, airport, etc. (depending on the land use, e.g., as farmland, for building, recreational purposes, the value of individual land plots will vary).	It is formed under the influence of market factors and the spatial heterogeneity of economic development across territories, yet it is not officially recognized as a distinct type of rent in Ukraine’s land legislation. Example: the rent per hectare of land in the Kyiv, Lviv, or Odesa regions is significantly higher than in remote areas; land value also increases near highways, railways, or logistics centers.
9.	Agricultural	Use of land as a production factor in the agricultural sector.	Income derived from the use of land as a primary means of production in the agricultural sector which arises from natural fertility, location, and the economic efficiency of management. Example: a farmer in the Cherkasy region, where chernozem soils possess high natural productivity, receives greater income per hectare than a farmer in the Zhytomyr region with less fertile soils, even under identical production costs; this difference constitutes agricultural rent, which is partially realized through land rent payments or as the landowner’s profit.
10.	Mining	It appears when land is used for extracting minerals.	Land plots are used for the extraction of mineral resources and generate surplus income from the exploitation of natural assets beyond normal profit levels. Example: in the extraction of iron ore in the Kryvyi Rih Basin or natural gas in the Poltava region, the state receives rent payments from subsoil users; these payments represent a form of mining rent and are transferred to state and local budgets as compensation for the depletion of non-renewable natural resources.
11.	Building	It appears when a land plot is developed for residential building.	It arises when the designated use of a land plot is changed from agricultural or industrial purposes to residential or public development; this type of rent reflects the increase in land value resulting from its inclusion within the boundaries of a settlement, the provision of utilities, and the development of surrounding infrastructure. Example: in the suburbs of Kyiv (such as Bucha, Irpin, and Sofiivska Borshchahivka), land plots previously used for agricultural purposes have increased in value several times after being reclassified for residential construction.
12.	Urban	It is created when a land plot is used to establish, for example, an enterprise or a settlement.	It arises from the use of land within urban areas for business development, residential, or commercial construction, which increases its economic value; this form of rent is generated by the concentration of population, infrastructure development, transport accessibility, and the overall business activity of the city. Example: in the central districts of Kyiv, Lviv, or Kharkiv, the value of land designated for office centers, shopping complexes, or residential buildings significantly exceeds that of similar plots located on the urban periphery.
13.	Rural (residential)	It appears when land in rural areas is used for residential housing for people working in towns, or as a site for an enterprise or an agritourism farm (the rent is typically higher in rural areas located closer to urban agglomerations than near small towns).	It arises when rural lands are used for individual housing construction, cottages, or agritourism enterprises, particularly near large cities or resort areas; its value increases due to growing demand for housing in environmentally clean locations with developed infrastructure and convenient transport accessibility to urban centers. Example: land plots in villages near Kyiv (Pidgirtsi, Kryukivshchyna, Bilohorodka) or near Lviv (Sokilnyky, Zymna Voda) have significantly higher rental and market value compared to more remote rural areas.
14.	Proprietary (capital)	The constant increase in market prices for land, an opportunity to lease land (and receive a lease rent).	It is manifested through the increase in the market value of land plots and the generation of income from their leasing, especially after the opening of the land market in 2021; owners of agricultural land can now freely sell or lease their property, obtaining a stable income without direct involvement in production activities.
15.	EU subsidies	An opportunity to receive subsidies from the EU budget as an owner or user of land.	Ukraine is not a member of the European Union and therefore does not have this type of rent; however, an analogous form is represented by state subsidies and agricultural support programs financed through the national budget and international assistance; such subsidies are provided to both landowners and tenants who use land according to its designated purpose and comply with environmental and technological standards. Example: in 2023–2024, Ukrainian farmers received subsidies per hectare of cultivated land (up to EUR 60/ha), partial compensation for agricultural machinery costs, support for organic farming, and land restoration programs in war-affected areas financed by the EU and FAO.
16.	Land use transformation	An opportunity to change the land use from agricultural to non-agricultural (deagriculturization).	Arises in the process of changing the designated use of land plots. Example: in suburban areas of Kyiv or Lviv regions, farmers or land share owners sell or lease plots reclassified for cottage construction or logistics parks; after the change in land designation, the value of the land can increase by 5–10 times, generating a transformation rent that the owner receives as a result of an administrative decision rather than productive land use.
17.	Social insurance	An option to join the Agricultural Social Insurance Fund6 (KRUS) (the difference between a higher contribution to the Social Insurance Fund7 (ZUS) and a lower one to the KRUS)	It is manifested in the form of preferential social security and taxation conditions for agricultural producers and landowners; although there is no specialized fund similar to Poland’s KRUS, Ukrainian farmers can obtain certain socio-economic benefits through their special status as payers of the single tax of the fourth group, which represents a simplified taxation system for agricultural producers.
18.	Public purpose (good)	Creating such non-production values by farmers that have a value for a large number of members of a given community (local, regional, national) and whose right to use cannot exclude anyone, e.g., protection of biodiversity, agricultural landscape, regional and cultural identity.	It is manifested through the creation of ecological, cultural, and social values by agricultural producers that are significant for the community and society as a whole; land users, by preserving natural landscapes, soil fertility, water resources, and traditional farming practices, generate ecosystem services that benefit all members of the community; in Ukraine, the public purpose manifests as an outcome of sustainable land resource management, which integrates economic benefits with ecological and cultural value.
19.	Monopoly	This type of rent, identified in Ukraine, in Polish conditions, does not exist in the same sense as, for example, income from natural monopolies; it is mainly included in the EU subsidy rent (e.g., crop subsidies available within the alternative scope).	Additional income that arises due to the unique natural properties or exclusive location of a land plot, which allows the production of goods with special quality characteristics or under conditions that cannot be replicated on other lands; it is the result of the scarcity of certain high-quality or unique land resources, the owners of which are able to set monopolistically higher prices for their products; example: viticulture and winemaking in southern regions (grape wine producers from Bessarabia or Transcarpathia receive additional profits due to the geographical origin, which gives the product the status of “terroir”); organic production (certified organic farms (Poltava, Zhytomyr, Lviv regions) sell their products at prices that are 1.5–2 times higher than usual); production of niche crops (land suitable for growing blueberries, asparagus, saffron or medicinal herbs is limited, so the profitability of such farms is 2–3 times higher than the industry average); farms near megacities (products of “local origin” (fresh market, farm vegetables, berries, honey) are in demand among consumers in large cities and are sold at a higher margin).
20.	Environmental	This type of rent is identified in Ukraine, in Polish conditions, and is mainly included in the EU subsidy rent (agri-environmental issues within the Common Agricultural Policy).	An economic benefit (income) that arises from the preservation or improvement of the natural environment, which provides socially significant ecosystem services (water purification, soil fertility preservation, carbon sequestration, biodiversity, etc.). Unlike absolute or differential rent, it is not based solely on the productivity of the land, but on its ecological value and contribution to environmental sustainability. Example: organic farming (producers who preserve natural soil fertility without using chemicals receive additional income through premium prices for their products (30–70% above market prices)); reforestation of degraded land and protective forest belts (such measures increase CO2 absorption, which can be monetized through carbon credits—a form of environmental rent); use of nature-based solutions (creation of buffer strips along rivers to filter runoff provides environmental benefits that exceed the private benefits to farmers); pilot projects on payments for ecosystem services (PES) (in 2023–2025, such initiatives are considered as part of climate change adaptation and green recovery programs, especially in the southern and eastern regions);
21.	Quasi-rent	This type of rent is identified in Ukraine, related to temporary economic or technological advantages in Polish conditions is mainly included in the EU subsidy rent, which is related to the modernization projects carried out.	Temporary excess income generated by more efficient or innovative use of agricultural land is a driver of modernization in Ukrainian agricultural production. Example: Irrigated agriculture in southern Ukraine (enterprises that have restored irrigation systems in the Kherson, Odessa, and Mykolaiv regions have higher yields (by 40–60%), which provides additional temporary income until similar systems are introduced on a mass scale); organic production (the first certified organic farms receive a price premium and access to EU export markets, which creates a quasi-rent of ecological origin until the organic segment becomes saturated); use of innovative agricultural technologies (farms that implement biostimulants, precision farming systems, and unmanned crop monitoring achieve cost reductions and increased yields, forming a short-term quasi-rent of a technological type).
22.	Anti-rent	This type of rent is identified in Ukraine; in Poland, over 61,000 hectares of soil are degraded; this is due to improper maintenance, inappropriate agricultural practices, poor agronomic practices, poor crop rotation, and lack of liming; approximately 64% of soils in Poland are acidic; most require liming. In such conditions, plants cannot absorb minerals from fertilizers, resulting in reduced yields and high fertilization costs.	A negative form of land rent that arises when the income from the use of a land plot does not cover production costs or is lower than the average profit that could be obtained under normal economic conditions. Example: soil degradation and contamination (more than 6.5 million hectares of agricultural land in Ukraine have been affected by erosion, salinization, flooding or chemical contamination); as a result, crop yields are reduced, fertilizer and land reclamation costs increase and production profitability falls below average levels, resulting in negative rent (anti-rent); mining and military destruction (after 2022, about 20% of Ukraine’s arable land will be temporarily lost or unusable due to mining, destruction of land reclamation infrastructure and contamination with explosive substances; such territories are removed from agricultural circulation, generating zero or negative rent for owners and the state); low level of agricultural technology and lack of investment (small-scale farms often do not have access to modern technologies and credit resources, which leads to lower yields and irrational use of land; under such conditions, even fertile areas can be unprofitable); improper land use structure (excessive ploughing of land (over 54% of the country’s territory) leads to the loss of natural ecosystems, reduced fertility and decreased environmental sustainability of agricultural landscapes, which manifests itself in economic anti-rent); underdeveloped infrastructure and logistics (in regions with poor transport links and a lack of elevators or roads, the costs of storing and delivering products increase, which also has a negative rent effect).

Source: Based on [2,37,38,39].

).

The differences in the forms of land rent in Poland and Ukraine are due to the specifics of the historical development of agrarian relations, the level of institutional support, and the condition of the land market in each country. In Poland, where private land ownership prevails (over 90% of agricultural land belongs to individuals), lease relations are of a secondary nature. The main forms of rent are differential rent I and II, which arise because of differences in natural soil fertility, the favorable location of land plots, and varying levels of capital investment in production. Absolute rent is of little significance in a developed land market with high competition. Poland’s membership in the European Union has a significant impact on the formation of land policy, stimulating sustainable land use practices and environmental protection [2].

In Ukraine, however, the situation is different. Most agricultural land is leased (over 70%), which leads to the dominance of absolute rent associated with land ownership rights and limited market mobility. At the same time, differential rents I and II are present, but their role is less significant due to the absence of a full-fledged market mechanism for land pricing. In some cases, monopoly rent is observed, which is characteristic of large agricultural holdings that control significant areas of leased land and have advantages in access to capital and resources. Environmental rent in Ukraine is only just emerging, while quasi-rent and anti-rent manifest themselves depending on the efficiency of land use, investment in technology, and the consequences of soil degradation [38,39].

Thus, in Poland, land rent is predominantly market-based and differential in nature, which contributes to the efficient use of land resources, innovative development of farms, and increased environmental sustainability of the agricultural sector. In Ukraine, however, rent relations have a mixed structure, dominated by absolute rent, and the formation of modern types of rent is hampered by imperfect legal regulation, low competition in the land market, and insufficient integration of environmental mechanisms into the land resource management system.

The prospects for convergence between the Ukrainian and Polish models lie in the development of a transparent land market, improvement of the lease system, and introduction of incentives for the formation of environmentally oriented rent forms that comply with the principles of sustainable land management.

The Common Agricultural Policy of the EU has led to the emergence of a new phenomenon that strengthens “the dependence of farmers on the market”, the so-called land market treadmill. Price subsidies and subsequent direct subsidies have contributed to the improved profitability of agriculture, which has stimulated the demand for agricultural land and raised its prices. Average prices of agricultural land in Poland increased tenfold in the years 2004–2024 (from approx. PLN 7/ha to PLN 70,000/ha). The competition for land, which is a rare resource, has grown stronger. Landowners are winners, as they can sell land for a profitable price or earn income leasing the land, which means that they need not worry about the traditional Cochrane’s treadmill8. In the land market treadmill, benefits can be earned not only by “early adopters” but also by economically weaker farmers, who can change the direction of their economic activity while earning benefits from leasing the land. “Average farmers”, who continue agricultural production, do not benefit from the increasing land prices [40,41,42,43].

In Ukraine, the use of agricultural land is associated with lease relations. The emergence of lease relations in Ukrainian agriculture is a direct consequence of the transformation processes that took place after the declaration of independence in 1991. In the context of the transition from an administrative-command system to a market economy, it was necessary to create legal and economic mechanisms that would ensure the effective use of land resources in new economic conditions. One of such mechanisms was the lease of land plots, which gradually became the leading form of land use in the agricultural sector [37].

The first stage of the formation of the land lease institution was the adoption of the law “On Forms of Land Ownership” [44] and the law “On Land Lease” [45], which established the possibility of transferring plots for temporary use. Lease became significantly widespread in the mid-1990s because of the sharecropping of collective farmlands: most shareowners did not have the resources for independent cultivation, so they transferred them to farmers or agricultural enterprises. At the second stage, after the adoption of the new law “On Land Lease” [45], the procedure for concluding contracts, terms, payment, and guarantees of the rights of the parties was institutionally regulated. This established lease as the main method of land use, which contributed to the concentration of land areas.

Further development of lease relations took place in the 2000s, when more than 70% of agricultural land was leased. The Land Code of Ukraine [46], adopted in 2001, finally established the institution of land lease as one of the key mechanisms of management in the agricultural sector. At the same time, the introduction of a moratorium on the purchase and sale of agricultural land stimulated the further spread of lease relations, as they remained the only legal way of transferring land plots into economic circulation.

The current stage began with the opening of the land market in 2021, but leasing retains a leading role: more than 80% of land is cultivated on this basis. This is explained by the gradual development of the market, restrictions for legal entities, and the reluctance of many shareholders to sell land [47].

So, currently in Ukraine, leasing continues to play a key role in ensuring the sustainable functioning of the agricultural sector, acting as a kind of compromise between small landowners and large commodity producers, as well as an important tool for adapting land use to new economic and legal realities.

The advantages and disadvantages of the lease model of agricultural land use in Ukraine for households and private farms are presented in

Table 3. Advantages and disadvantages of the lease model of agricultural land use in Ukraine.

Entity	Advantages	Disadvantages
Private farms	- Access to land without large capital investments - Ability to form large land areas - Flexibility in scaling production - Reduced financial risks compared to buying land	- Instability of land use due to the risk of contract termination - Fragmentation of land plots - Dependence on land plot owners and their requirements - Limited long-term investments due to short lease terms
Households (land plot owners)	- Stable income from rent (cash or in kind) - Preservation of land ownership - No need to invest in equipment and materials	- Dependence on the tenant’s good faith - Low payments in many regions - Control loss over the state of the land and ecology - The risk of land concentration in the hands of large agricultural holdings

Source: [37,45].

.

In order to prevent excessive concentration of land ownership in the hands of individuals and to prevent abuse of monopoly power, the state regulates the agricultural land lease market. This contributes to the formation of a multi-level land use system based on equal ownership rights, rational land use, and increasing investment attractiveness.

The essence of the land lease market lies in creating institutional and economic conditions for transferring land to efficient producers, stimulating investment in agriculture, and setting lease payments on a competitive basis. An important element is the normative monetary valuation of land plots, which determines the starting price of the lease and serves as a benchmark for potential tenants (Resolution of the Ministers of Ukraine) [38].

State policy in the field of land leasing is aimed at ensuring transparency, openness, and non-discriminatory access to state and municipal land, which is implemented through the introduction of electronic land auctions.

In the case of leasing private land, the parties have the opportunity to independently determine the terms of the agreement—the validity term, the payment, and other provisions. At the same time, the lease term of agricultural land is from 7 to 50 years, and the rent payment cannot be lower than the land tax. The lease agreement is subject to state registration, after which the lessee acquires all the rights provided for in the agreement.

In total, there are approximately 6.8 million landlords in Ukraine, with an average share size of 3.6–4.2 hectares. The main motivation is to obtain a stable income from rent without personal involvement in production. The average rent is approximately EUR 115–150/hectare per year. Awareness of the land market is low, with less than 30% of owners knowing the market value of their land.

There are over 45,000 agricultural enterprises leasing land, of which approximately 70% are farms and small enterprises, and about 30% are medium and large agricultural holdings. The average size of leased land by farms is 100–500 hectares, and by agricultural holdings is 10–100 thousand hectares. In most cases, the lease term is 7–10 years, and in some cases, up to 50 years. Tenants mainly grow grain and industrial crops (wheat, corn, sunflower, rapeseed) on leased land.

Today, there are over 4.3 million registered lease agreements in Ukraine. Rent as a percentage of the normative monetary valuation averages 12–14%. There are cases when disputes arise in court practice, with about 5–7% of agreements accompanied by conflicts (non-payment, change in terms). Currently, all new agreements are registered through the State Land Cadaster and electronic auctions (Prozorro. Sale).

Thus, the development of the rental market is accompanied by increased transparency thanks to the introduction of electronic land auctions, digital cadasters, and the improvement of legal mechanisms for registering contracts. At the same time, such challenges result in low awareness of market value among landowners, uneven rental rates, and the concentration of land in large agricultural structures remaining.

4. Conclusions

The results of analyses conducted in this manuscript regarding the identification and comparison of land rents in Poland and Ukraine have shown that, in addition to historically established land rents related to soil quality, which determines yields and income from land, ownership rights, and land’s location relative to cities, new rents are emerging, such as those related to Polish agriculture operating under the Common Agricultural Policy, i.e., the possession (use) of land that entitles one to receive subsidies.

This type of rent, on the one hand, allows agricultural producers and land investors to achieve higher incomes, but on the other hand, it causes a reluctance to sell land, even if it is not the primary source of income (the basis for organizing a farm). This situation contributes to the inhibition of spatial transformation (land concentration) in Polish agriculture. Such rents do not occur in Ukraine, as the country is not a member of the European Union. Land rent values in Poland are currently less closely linked to land quality. For example, lower-quality land located near urban centers, which can be designated for residential or non-residential development, may command a higher price than good-quality agricultural land that cannot be excluded from agricultural use and has only one type of productive use.

Another important issue is who should receive the highest land rents: landowners or those who use them. In Poland, work is underway on a law on the lease of agricultural land, which until now has not been regulated by separate legislation. These issues were also raised in discussions on the latest strategic plan. It is crucial for the efficiency and rational management of agricultural land that financial resources from Common Agricultural Policy instruments reach those who actually manage the land.

Analysis of the various types of land rent has enormous practical significance for public policy, landowners, and agricultural producers in Ukraine. They determine the direction of land regulations, taxation, investment policy, and the equitable distribution of income in agriculture. Therefore, the consequences for policymakers are as follows: shaping a fair tax policy—taking into account the types of rent allows for the optimization of land tax and rent, stimulating rational land use; preventing excessive land concentration—understanding the nature of absolute rent helps limit the monopolization of land by large farms; creating support programs for small farmers—reducing rent pressure on small producers contributes to social stability and rural development; stimulating ecologically sustainable land use—environmental rent can become the basis for a system of “green” payments and compensation for ecosystem protection; investment attractiveness—a transparent rent system increases investor confidence in the agricultural market.

For landowners, the consequences are as follows: increasing land value—awareness of the existence of absolute and differential rent strengthens landowners’ position in lease negotiations; the possibility of a stable income—even low-yielding land can be profitable thanks to absolute rent; an incentive to increase fertility—landowners are interested in introducing innovations and monitoring land use efficiency; the need to comply with environmental standards—with the development of environmental rent, the responsibility for protecting soil and ecosystems increases. For agricultural producers (tenants), the consequences are as follows: motivation to increase production efficiency—understanding differential rent II encourages technological innovation and rational resource use; increased costs due to rent—high absolute rent can reduce the profitability of farmers, especially small farmers; the need for transparent lease agreements—it is important to clearly define rent payment terms to avoid conflicts; and economic interest in sustainable land use—producers can benefit from ecosystem services if the state introduces environmental fees.

Thus, the various types of land rent—absolute, differential, monopoly, environmental, anti-rent, and quasi-rent—reflect the multidimensional nature of the Ukrainian agricultural economy. To ensure sustainable development, state policy should: regulate rent income through tax and lease mechanisms; ensure equitable distribution of profits between landowners and tenants; and stimulate environmentally friendly land use as the basis for a “green” economy.

As a result, the rent system can become a tool for modernizing the agricultural sector, not just a source of tax revenue. Further rent studies should focus on improving the land resource management system in Ukraine, taking into account economic, environmental, and social factors. Studying the mechanisms of land rent formation and distribution will ensure fair land use, increase land use efficiency, and improve the financial capacity of communities. Studies of environmental rent, the digitization of management processes, and the introduction of innovative approaches in the context of post-war reconstruction are of particular importance. Combining the rent approach with modern land management policies will contribute to the formation of a transparent, competitive, and sustainable agricultural market in Ukraine. Overall, the comparative analysis of land rent types in Poland and Ukraine indicates a shared economic nature but significant differences in the mechanisms of their formation and distribution. In Poland, the system of rent relations is more structured, integrated into the European agricultural policy, and supported through EU instruments. In contrast, in Ukraine, rent processes remain at the stage of institutional development, dominated by absolute and differential rents formed mainly through market mechanisms of land leasing and the unevenness of natural conditions.

Further harmonization of Ukraine’s rent policy with European approaches may contribute to a fairer distribution of income from land use and to strengthening the ecological and social responsibility of the agricultural sector. Future research on land rents in Poland and Ukraine should be supported by empirical research and comparative analysis of the specific effects of the existence of individual types of rents.