Economic activities are never conducted in a legal vacuum. A growing volume of literature suggests that institutions have profound effect on economic performance and welfare. This book examines the significance of institutional environment for agricultural production. The contribution is both theoretical and empirical. First, relevant theory of institutional economics is reviewed that explains how institutions contribute to the productivity in general, especially if interpreted as economic freedom. Second, a model of agricultural production is presented, which explains aggregate agricultural production using various inputs, as well as variables representing institutional environment. The empirical results show certain significance of institutional variables and suggest some directions for further research. It shall draw attention both among scholars in agricultural economics and among policy makers.