Agricultural structure - the size, number, specialization, concentration etc. of farms - is changing heavily these years. To a large extend this development is a result of the economic and technological development, which takes place in a developed society. The development follows a rather common global pattern, all though there will be different trends and structures from country to country.Farm Management,

Hansen, Henning Otte

English

Research Papers in Economics

 
 
 
 
 
 
Structural Development in Agriculture – A Global Perspective  
 
 
 
 
 
Henning Otte Hansen 
 
 
 
 
 
 
Paper prepared for presentation at the 13
th International Farm Management Congress, 
Wageningen, The Netherlands, July 7-12, 2002 
 
 
 
 
 
 
 
 
Copyright 2002 by Henning Otte Hansen.  All rights reserved.  Readers may make 
verbatim copies of this document for non-commercial purposes by any means, provided 
that this copyright notice appears on all such copies.  
 
 
 
 
 
 
   1
 
Structural development in agriculture 
 
- A global perspective 
 
 
By director, Ph.D., M.Sc. (Agr. and Econ)   
Henning Otte Hansen,  
Danish Agricultural Council 
 
 
Theme and main results  
 
Agricultural structure - the size, number, specialization, concentration 
etc. of farms - is changing heavily these years. To a large extend this 
development is a result of the economic and technological development, 
which takes place in a developed society. The development follows a 
rather common global pattern, all though there will be different trends 
and structures from country to country.   
 
 
 
 
Henning Otte Hansen 
Danish Agricultural Council 
Axeltorv 3 
DK-1609 Copenhagen V 
e-mail: hoh@landbrug.dk 
 
Tel: + 45 33 39 40 00 
Tel. direct: +45 33 39 42 82. 
   2
Summary 
The structural trend in agriculture is relatively common for most industrialized 
countries. However,  the structural level (size of farms etc.) seems to differ considerably. 
Farms in the most developed agriculture are 10-20 times as big as in the least developed 
agriculture. The general picture shows that the structure in agriculture is most developed 
in countries with high income levels. 
 
Specialization and concentration is increasing. Also vertical integration is becoming 
more important, as more and more products are traded under production contracts. 
 
Inputs in agriculture have a changing composition, as capital replaces labour. Hired 
labour is becoming less important, farmers often have part time jobs outside the farm, 
and thus part time farming is increasing. 
 
The structural development in agriculture is caused by  
-  economies of scale, 
- technology,   
- increasing  wages, 
- legislation,   
-  infra structure  
- farm  income. 
 
The structural development during the latest decades will probably continue in future. 
The trend does not seem to alter dramatically, as no economic, political or market 
conditions - which potentially could effect the structural development - seem to change 
in the years to come. 
 
Certain elements might effect the structural development in agriculture in the nearest 
future:  
-  The agricultural policy,  
-  enviromental policy,  
-  rural and district policy,  
- agricultural  income,   
- contracting,   
-  technology and  
- structural  policy 
 
   3
What is structural development ? 
Structural development in agriculture can be defined and described in many 
different ways. Structure is not only the size and the number of farms. Also 
specialization, concentration, ownership, vertical integration etc. are changing and 
are part of the structural development.  
 
In the recent years agricultural structure has had an even broader implication and 
importance. Now all links in the value chain from R&D, input industry, 
agricultural production, food processing, distribution, marketing, retail and 
consumption  are more or less included. The entire food system is a new 
dimension in agricultural structure. 
 
The original methods to describe the structural development are insufficient in 
describing the development.  Changes occur in new dimensions and the 
industrialization aspect has become predominant.  
 
Empirically, structural development can be visualized by seven different 
parametres:  
 
The number of farms is an important parameter in the structural development in 
agriculture.  
 
The number of farms has decreased during decades and is an indicator - or result - 
of structural development. The trend is global and does indeed influence society 
and the economic surroundings. 
 
The size of the farms is also a result of structural development. Size is not a 
definite estimate: There are different ways to measure size, and often an average 
size covers a large deviation. 
 
Specialization describes the composition of production on the individual farms. 
When farms focus on one or fewer production branches specialization occurs. 
There is a clear trend towards increased specialization. 
   4
Concentration is also increasing. When a small percentage of farmers produce a 
large and increasing share of total production, the agricultural structure is 
becoming more concentrated. 
 
Ownership is essential for structural development. Farms can be owned by 
individual farmers or by companies, or farms can be tenated. 
 
Vertical integration and contracting illustrate the link and interdependency 
between on one hand farmers’ production and on the other hand the food industry, 
processing companies, retail sector, marketing etc. With increasing vertical 
integration farming becomes more and more industrialized. Demand arises among 
consumers and demand is transferred through the whole value chain back to 
farmers. 
 
Agricultural inputs are also an important dimension in agricultural structure. 
Inputs are changing, as capital and technology replace labour. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   5
Table 1. Size of farms measured by different estimates  
(average size per farm) 
 
  Land Production  Value  added  Income
 Ha  1000$  1000$  1000$
     
EU15  17 33 19  11 
Belgium 19  108  50  20 
Denmark  40 87 45  17 
Germany  30 57 30  13 
Greece  5 16 12  12 
Spain  20 22 11  11 
France  39 69 39  23 
Ireland  28 32 17  19 
Italy  6 17 12  5 
Netherland 18  163  93  30 
Austria  15 20 12  6 
Portugal 9  14  7  4 
Finland  22 31 16  11 
Sweden  34 37 15  3 
UK  70 94 45  32 
United States  207  102  50  17 
Japan  2 19 12  6 
Canada  247 67 31  8 
Australia  295 67 33  16 
New  Zealand 220 81 37  18 
 
 
Source: Own calculations based on European Commission (several issues), USDA (several 
issues), OECD (1997), OECD (1999). 
 
 
 
 
 
 
 
 
 
   6
Table 2. The 5 per cent biggest farms’ share of total production 
 
  Dairy   Feeding    
 cows  Cattle  pigs  Pigs  Land 
Belgium  12,7 21,3  20,5 23,6  23,0 
Denmark 8,0  18,9  26,8  32,0  21,0 
Germany  28,0 30,1  53,6 46,0  44,0   
Greece  34,3 37,9  90,0 90,8  29,6   
Spain  30,7 39,2  61,0 83,4  59,3   
France  12,0 18,5  48,9 55,2  20,7   
Ireland  16,1 25,0  55,2 33,3  20,6   
Italy  33,0 43,6  88,6 90,3  50,7 
Netherland  13,9 22,1  24,4 27,9  23,0   
Austria  15,9 16,9  55,0 52,2  36,4 
Portugal  36,0 46,2  81,0 78,7  64,0 
Finland  10,7 15,0  26,0 18,5  17,5 
Sweden  16,1 19,1  35,7 37,5  24,8   
UK  15,7 18,3  38,0 42,0  19,8 
 
Source: Own calculations based on  EUROSTAT (1998).  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   7
Figure 1. Cooperatives in EU 
Share of total agricultural production 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
32
34
36
38
40
1970 1975 1980 1985 1990 1995 2000
Pct.
Figure 2. Added value in the total  food sector: 
Distribution between agriculture and food industry (OECD) 
 
 
 
 
 
 
 
 
 
 
 
0
10
20
30
40
50
60
70
80
1970 1975 1980 1985 1990 1995
Per cent
Agriculture
Food industry  8
Figure 3. Pigs per farm 
 
 
 
 
 
 
 
 
 
 
 
 
 
1960
0
100
200
300
400
500
600
700
1920 1940 1980 2000
Pigs per farm
Holland
Denmark
Canada
Figure 4. Farms with poultry 
Per cent of total no. of farms 
 
 
 
 
 
 
 
 
 
 
 
 
0
10
20
30
40
50
60
70
80
90
100
1920 1940 1960 1980 2000
Denmark
USA
Per cent  9
Figure 5. Production contracts in EU 
Share of total production 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
30
35
40
45
50
1972 1977 1982 1987 1992 1997
Pct.
 
Figure 6. Production contracts in United States 
Share of total production af feeding pigs 
 
 
 
 
 
 
 
 
 
0
20
40
60
80
100
1970 1980 1990 1999
Open market
Vertical integration
Contract
Per cent  10
Figure 7. Farms with both pigs and dairy cows  
(Denmark) 
 
 
 
 
 
 
 
 
 
 
 
 
0
10
20
30
40
50
60
70
80
90
1965 1970 1975 1980 1985 1990 1995 2000
Per cent
 
Figure 8. Agricultural labour (share of total labour)  
as a function of GDP per capita 
 
 
 
 
 
 
 
 
 
 
 
-
20
40
60
80
100
100 1.000 10.000 100.000
Per cent
GDP/capita  11
Figure 9. Part time farming (% of total no. of farms) 
(Denmark) 
 
 
 
 
 
 
 
 
 
 
 
 
 
20
25
30
35
40
45
50
55
60
65
64 73 76 79 80 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
Pct.
Figure 10. Farm size (hectares per farm). Index 1920 = 100 
 
 
 
 
 
 
 
 
 
 
 
 
50
100
150
200
250
300
350
1920 1940 1960 1980 2000
Denmark
Sverige
US
Canada
Index 1920 = 100  12
References: 
 
 
European Commission (several issues): „Agriculture in the European 
Union - Statistical and economic information  
 
EUROSTAT (1998): Agriculture. Statistical yearbook. 1998. 
 
FAO (2000): FAOSTAT Database Collections (Internet). 
http://apps.fao.org/cgi-bin/nph- db.pl?subset=agriculture 
 
Hansen, Henning Otte (2001): Landbrug i et moderne samfund. 
Copenhagen Business School Press.  
 
OECD (1997): Globalisation and Environment. Preliminary Perspectives. 
OECD Proceedings. 
 
OECD (1999): Agricultural Policies in OECD Countries. Monitoring and 
Evaluation 1999. 
 
USDA (several issues): Agricultural Statistics. 
 
 
 
 
 
 
 
 
 
   13
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Agricultural Policies in OECD Countries. Monitoring and Evaluation

European Commission (several issues): „Agriculture in the European Union - Statistical and economic information EUROSTAT

FAOSTAT Database Collections (Internet). http://apps.fao.org/cgi-bin/nph- db.pl?subset=agriculture Hansen, Henning Otte (2001): Landbrug i et moderne samfund.

Structural Development in Agriculture - A Global Perspective

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