Because of the specificities of agriculture, agricultural production functions are basically homogenous and of degree 1, i.e., with constant returns to scale. Under such conditions, the neoclassical economic theory shows that, under competition, and in the absence of monopoly power, prices should equate production costs. The only possible departures from this arise because of risk (in which case, profits are derived from riskpremia) or because fixed factors are not valued at their opportunity cost.
