On the Dynamics of Structural Change in Agriculture

Abstract

The agricultural sector in Europe faces a number of important challenges, such as developments in biotechnology and biofuel, globalization, vertical integration and policy changes. The important questions are whether and how farms are able to adapt to these changes and what are the potential forces working against adaptation. This paper elaborates on internal frictions regarding structural change in agriculture, namely sunk costs, dependence on subsidies and the challenges of an increasing demand for vertical integration.