Premises of the New Agricultural Economics

The industrial agriculture model faces a great deal of criticism nowadays, most of all because of its external effects. Also its driving forces run out. This model is replaced by the sustainable agriculture model, which takes account of the limitations of natural resources, external costs and public good as well as social and economic objectives. Development of agriculture according to the sustainable agriculture model requires that the market mechanism be supplemented with the institutional (political) mechanism. This mechanism is developed within the Common Agricultural Policy of the European Union. The model of sustainable agriculture corresponds to the new agricultural economics - a changed economic account covering, in addition to market "items", other elements related to external costs and public goods created by agriculture. The globalisation process shifts the problems of agriculture to the global level, giving them new dynamics and strongly influencing agriculture in individual countries. External forces determine to a growing extent the functioning of agriculture, whereas the role of the institutional (political) factor is reduced, since globalisation in the political field lags behind the globalisation in the economy. The above mentioned factors exert their influence on the development of agriculture, adversely affecting the sustainable agriculture model.