The agricultural treadmill – a way out through differentiation? An empirical analysis of organic farming and the agricultural treadmill
Purpose: The agricultural treadmill is explored, describing how technology create productivity gains for the benefit of progressive farmers, but where the result is also increased supply, falling prices, economic problems for laggard farmers and thus the need for new achievements in technology. To escape from this treadmill, farmers try to diversify into new more attractive segments, like agro-tourism and organic agriculture.
Methods: The elements and processes in the treadmill are described and supported by empirical time series. Possibilities of delaying or stopping the treadmill are discussed. A hypothesis is raised, whether organic farming is able to escape the treadmill; it is answered from both a theoretical and an empirical point of view. Empirical analysis is based on Danish agriculture, which has a significant organic agricultural production.
Results: The major finding is, that the structural and productivity developments and price trends are almost identical in the organic and conventional agriculture. Findings do not validate the initial hypothesis raised, whether conditions like economies of scale, structural development, productivity pressures and real price declines are significantly different in organic agriculture.
Implications: Differentiated products such as organic products can only reduce or delay the conditions under which agriculture operates. It is difficult to differentiate even organic foods, and with low entry barriers and fixed assets, long term prices of organic products will not increase significantly more than prices of conventional products.
Treadmill, organic agriculture, differentiation, productivity, Blue Ocean
N5, Q1, Q12