The paper investigates the significance of external and internal transaction costs and risk in agriculture in the Tatarstan Republic. The analysis is conducted for independent farms and farms which are members of agroholdings. The result indicates that external transaction costs are more marked in independent farms than in agroholding members. However, average prices do not differ among the organisational forms. With regard to internal transaction costs (or inefficiency) the result is the opposite. Inefficiency in agroholding members is considerably higher than in independent farms. However, the estimation suggests that this result is due to more intense risk management in agroholding members. Thus, members of a business group have a more intense use of inputs; however, these are rather allocated to reduce uncertainty of production than to increase production.


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