An empirical economic model to reveal behaviour characteristics driving the evolution of agriculture in Belgium

Abstract

Effective design of agricultural policies requires an understanding of the drivers behind the evolution of the agricultural sector. This project builds an evolutionary economic model of the Belgian agricultural sector, as a testing ground for new policies. This agent-based model simulates the dairy, cow and pig sector. The model is calibrated to historical data of production and farm diversity during the period 2003 - 2013. Profit maximising agents cannot replicate the historical trends. When assuming heterogeneous behaviours, the actual evolution can be reproduced much more closely. The calibration reveals key behaviour variables. The evolution in the agricultural sector can only be explained when accounting for a resistance to change at farm level or at market level. However, this approach cannot determine the exact location of this resistance. The resistance to change can result from personal convictions of the farmer or from market rigidities and learning effects.