Professional Documents
Culture Documents
CONTENTS
Acknowledgement .............2
Objective ....4
Research methodology4
Introduction .... 5-6
Meaning and definition of land...................................................6
Why land is an asset?..................................................................7
Peculiarities or features of land.............................................. 8-13
Land as a real property..........................................................14-15
Land as a fixed asset and capital asset...................................15-16
Conclusion..................................................................................17
OBJECTIVE
-To study the definition and meaning of land
-To study the different peculiarities or features of land
-To study the value of land in different aspects
-To study why land is a financial asset
RESEARCH METHODOLOGY
This doctoral project has been done taking the help of secondary data i.e. websites,
books, journals, doctrines, articles and research work.It is descriptive in nature. To
construct this project, the help of dictionaries, websites as well as social science
websites, books on the said case have been taken. The points as discussed in this project
include the study of different sources on the topic as well as the points guided by the
faculty.Footnotes have also been provided for acknowledging the source.
INTRODUCTION
A few decades ago, everyone wanted to have a piece of agricultural land to grow crops and
have animal units for him. People lived in the villages and the whole village economy was
centred on agriculture along with cattle. Both agriculture and animal husbandry went together
in the village economy. Almost all the people in the village were employed in farming and
animal husbandry. Each village was self sufficient or rather it is better to say that people in
each village managed to live with what they had. Each village was a socio-political and
economic unit. Being less connected with roads and communication, each village existed to a
great extent as an isolated and independent unit. Also peoples needs were limited and people
were accustomed to live with what they had rather than trying to get what they dont have.
People lived in a subsistent and land centred economy. In other words people lived in kinds
centred economy as opposed to cash centred economy.1
In a subsistent economy the land was the prime factor of production and land was an asset of
highest value. The only way of utilizing the labour of the villagers was to engage themselves
in farming and animal husbandry operations. Of course there were job descriptions according
to caste. However they all contributed to the whole well being of the village and they were all
paid mostly in kind: in grains or some other farm products. In the ancient times all the
transactions were done through barter system. Slowly money was introduced as a means of
exchange and people began receiving money as remuneration for their labour and other
services. Gradually a money centred economy emerged and the importance of land as a
means of livelihood slowly decreased.2
In the beginning, selling of agriculture, animal husbandry and other land related products was
the main source of money for the people. But as time went on and as roads and transport
facilities increased the mobility of the people in- creased and people began to get more and
more opportunities to earn money without having land and land products. Gradually more
and more people are moving away from the land and getting occupied into nonfarm
sectors.But why still land is very important in our technologically advanced world? After all,
developed nations even have thriving Internet economies, where wealth is created virtually
1http://www.world-agriculture.com/blog/2014/agricultural-economics-aes/land-assetliability/
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yet leads to tangible benefits in the material world. Companies such as Googledont even
usesignificant amounts of land in the vast majority of their business transactions. So why,
then, does land still matter? The answer is simpler than you think: look down.
Yes, youre standing on it right now. Land matters. Its like the air you breathe you cant
live without it and you probably dont really pay much attention to it either.
It also matters because people buy and sell it. Imagine if people bought and sold the air! But
unlike the air, land is more limiting: theres only so much of it in each location which is
why land has a price tag. In fact, land enables you to have access to locations: if you own
land in an urban environment, youll have access to a lot more goods and services in the
surrounding environment than if you owned land in a rural area.
Because land is inherently limited for each location, it acts like a cool pane of glass that
coalesces invisible water vapour into droplets by coalescing demand for a particular to
have a host of negative side-effects such as involuntary unemployment, ecological
destruction, and even economic boom and bust cycles.3
3http://www.world-agriculture.com/blog/2014/agricultural-economics-aes/land-assetliability/
4http://www.henrygeorge.org/def2.htm
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Land stands for all nature, living and lifeless. It includes all natural resources that human
being get free from air, water and land. In short, the terms land refers all that nature has
created on the earth, above the earth and below the earths surface.6
The term 'land' includes all physical elements in the wealth of a nation bestowed by nature;
such as climate, environment, fields, forests, minerals, mountains, lakes, streams, seas, and
animals.7
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7 http://www.businessdictionary.com/definition/land.html
8http://en.wikipedia.org/wiki/Asset
9http://www.businessdictionary.com/definition/land.html
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Though all factors are required for production, land puts foundation for production process.
Starting point of production process is an acquisition of land. So, it is a primary factor.12 This
primary input and factor of production which is not consumed but without which no
production is possible. It is the resource that has no cost of production and, although
its usage can be switched from a less to more profitable one, its supply cannot be increased.
Factors affecting productivity of land: Different pieces of land differ in quality or
productivity. The productivity depends upon following factors.13
10http://agriinfo.in/?page=topic&superid=9&topicid=194
11.http://www.compilerpress.ca/Competitiveness/Anno/Anno%20Dooley%20Labour%20Theory
%20of%20Value.htm#4.3 The rent of land.
12 http://kalyan-city.blogspot.com/2010/11/land-is-natural-factor-of-production.html
13http://agriinfo.in/?page=topic&superid=9&topicid=194
1. Natural factors: The factors like soil, climate, rainfall, topography influence the
productivity. The sandy soil with low rainfall always yield less but it is not so in cause
of black cotton soil. It always yields more.
2. Human factor: Man is always trying his best how maximum output can be obtained
from land. So many deficiencies are always tacked good yields. This human effort is
very important to increase the productivity.
3. Situation factor: The location of the land many a times determines the productivity.
The fertile land in remote corner of the country perhaps may not be cultivated but the
land having less fertility but located nearby marked can give a good yield.
LAND IN AGRICULTURAL SECTOR:
In the present system of agriculture land is the main factor for the production of food and
other essential items. However in the present agricultural production system land is a liability
rather than an asset. The factors responsible for this mishap are soil factors, non soil factors,
economic factors and human factors. Under each of these factors there are several sub factors
and even sub factors creating a multiple and complex effect on the production capacity of the
land. It is to be remembered that anyone of these factors is a limiting factor for the
production. In other words production is a function of all these factors. The major factors are
briefly explained here.
1. Soil factors:
In the agricultural sector at present land is involved actively in the production process.
Normally the quantity of land in terms of area is directly related to the quantity of production.
For a given type of land, less the area cultivated less will be the production and more the area
cultivated more will be the production.
The production also depends on the quality of land used. We get more production from a
good land compared to another which is poor in quality.
The quality of the land depends on the physical and chemical characteristics of the soil. The
physical characteristics of the soil are soiltexture, soil structure, soil density, soil porosity, soil
air, soil temperature, soil water etc.
The organic: matter content in the soil is a highly determining factor for soil productivity. The
total organic matter in the soil depends on how much it has been incorporated naturally or
artificially. Certain cultural practices of burning all the crop residues and weeds drastically
reduce the possibility of organic matter build up in the soil. At the same time conscious
incorporation of the crop residues and weed into the farm land will substantially increase the
organic matter content in the soil.14
2. Climatic factors
Production also depends on the climatological factors especially the sunshine hours,
composition of air, moisture availability and the temperature. Due to high temperature, longer
sunshine hours and higher moisture availability the photosynthetic activity and consequently
the total biomass production and the crop yield is more in the tropical areas. In such areas
maximum number of crops can be grown and hence the productivity per unit area is
maximized.
The crop productivity depends on other climatic factors such as the rainfall pattern, wind
velocity, humidity, drought conditions etc. The rainfall pattern implies the distribution pattern
as well as the total quantity of rain received throughout the year.
3. Non soil factors
The production also depends on the external factors such as seed, fertilizers and manures
used, incidence of pests and diseases etc. The production capacities of different seeds vary
with varieties. High yielding seeds are far superior in yields compared to the local varieties.
Proper use of fertilizers and manures according to the soil test values will result in better
yield compared to improper use of fertilizers and manures without any soil test.
14http://www.world-agriculture.com/blog/2014/agricultural-economics-aes/land-assetliability/
The crops are susceptible to pests and diseases at any stage of their growth. Sometimes
farmers have to abandon the whole crop due to attack of pests and diseases. The incidences of
pest also vary a lot. Some years it comes like an epidemic and in some years no pests at all.
The crops are infested with all kinds of weeds. Sometimes the intensity of weed growth is
such that the farmer has to abandon the field. Sometimes he has to use very powerful and
harmful weedicides.
Natural calamities like cyclone, hail stones, frost, snow fall, heavy rain, strong wind, fire,
earth quakes, volcanoes etc. affect the crop adversely.
4. Human and economic factor
In the production system the main human factor is labour or the human energy needed to
cultivate the land and raise the crops or animals. The energy required for carrying things long
distances, up and down on the slopes, digging the soil, digging a pit for planting a sapling, for
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puddling, weeding, harvesting and threshing etc. under the sun, rain, cold and heat is much
more than any other work except logging, quarrying and fishing when done manually.
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exert themselves, and this human exertion in production is called labor. Everything that
people do, to convert natural opportunities into human satisfactions -- whether it involves the
exertion of brawn, or brains, or both -- is labor, to the economist.
immediately prompt them to withdraw a part of their land. The alternative uses of land
make rent a cost of production in each alternative use, not only to the farmer, but also to
society. Smith did not, perhaps, fully and distinctly formulates his theory of rent, for Ricardo
and others apparently did not understand it.17
We commonly speak of paying "rent" for building accommodations, or for hiring an office
machine or an automobile. Because of the essential difference between land and capital, such
payments are not economic rent. Because of our focus in this course on the distribution of
wealth, we restrict the term rent to the return to land.18
It is not Land itself that gets rent, of course, but those who own land. It is not Capital itself
that gets interest, but the owners of capital. If someone owns both, and manages them
himself, then that person gets an income, called "profit," which contains all three elements:
rent, interest, and wages-of-management.21
Rent in its classical sense means payment for the use of something in fixed supply, or, more
generally, payments above the costs incurred for its creation. Disequilibrium and
inefficiencies in economic development resulted if the appropriate prices were not paid for
each factor. But, as we shall see, there were powerful interests in this country, bent on not
seeing any rent extracted from land use, which persuaded the nascent economics profession at
the end of the 19th century no longer to regard land as a separate factor and to redefine the
terms of production instead in two- factor theory. This was concurrent with the inclusion of
land as property, since called "real property."
As land came to be transferred to other nobility and usurped under title in fee simple rather
than in usufruct, it came to be regarded as a private financial asset. Earlier it was regarded as
part of nature, much like air, water, wind and weather. Accounting practices now listed land
as an asset "owned" in fee simple, and as a liability on the other side of balance sheets in
money "owed" to banks. This tendency has been extended today so that we have privatized
much of our air, water, wind, and even sunlight. Land came to be simply one kind of capital,
nothing special, and nothing requiring further treatment. Ricardo's Law of Rent became an
artefact of intellectual history. The conflation of land into capital to create two-factor
economics is one of the greatest paradigm shifts in the evolution of social philosophy.
depreciablepersonal property used for business (such as rental property), protected creative
works (such as copyrights on a book), and government publications purchased or received for
free from the government.
Capital assets usually include buildings, land, and major equipment. For example, Company
XYZ might own a factory building on three acres of land, and the factory might be full of
expensive equipment. The building, the land, and the equipment are all usually considered
capital assets.22
Fixed assets, also known as Property, Plant and Equipment, are tangible assets held by an
entity for the production or supply of goods and services, for rentals to others, or for
administrative purposes. These assets are expected to be used for more than one accounting
period. Fixed assets are generally not considered to be a liquid form of assets unlike current
assets. Examples of common types of fixed assets include buildings, land, furniture and
fixtures, machines and vehicles. 23
If your company owns land the ground under your office building, for example you list
it separately from your office building on the balance sheet. Unlike other fixed assets, land
doesnt depreciate on your balance sheet because its considered an asset that doesnt wear
out over time.24
22 http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/capital-asset123
23http://accounting-simplified.com/financial/fixed-assets/
24 http://www.dummies.com/how-to/content/business-plan-balance-sheet-fixed-assets.html
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CONCLUSION:
Land is defined as everything in the universe that is not created by human beings. It includes
more than the mere surface of the earth. Air, sunlight, forests, earth, water and minerals are
all classified as land, as are all manner of natural forces or opportunities that are not created
by people. Labor uses capital on land to produce wealth. Every tangible good is made up of
the raw materials that come from nature -- and because all people (and other living things)
have material needs for survival, everyone must have access to some land in order to live.
In every man there is an insatiable craving for owning some land. This craving for the land is
satisfied by acquiring some land. He may buy it or inherit it from his parents.
Land in the nature is limited. However land is necessary for man to exist and to operate
upon.It is from the land that he derives all the necessary things for his existence and
development. Man carne from the earth and he will go back to the earth after his life.
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Land is used for a number of purposes. In agricultural sector, land is the basic important
element through which capital comes. This means it is also a very important factor of
production which is already discussed.
May be today our economy is capital- centered as whether it is an agricultural sector or nonagricultural sector, economic person focus on capital. But as we can see in many case capital
comes from land when land act as real property, in agricultural sector etc. Land, for example,
is often referred to as "capital", in the sense that one can buy land and uses it as a "capital
investment". Though land is a tangible asset, it gives capital which is an intangible asset. And
land comes under capital asset. Thus we can conclude by considering land as a financial
asset.
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http://www.world-agriculture.com/blog/2014/agricultural-economics-aes/land-assetliability/
http://agriinfo.in/?page=topic&superid=9&topicid=194
http://kalyan-city.blogspot.com/2010/11/land-is-natural-factor-of-production.html
http://en.wikipedia.org/wiki/Asset
http://www.businessdictionary.com/definition/land.html
http://www.world-agriculture.com/blog/2014/agricultural-economics-aes/land-assetliability/
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