Farmers' Strategies in Globalizing Markets: Empirical Results from Germany

Abstract

Today the European agrofood sector is increasingly confronted with the threats as well as the opportunities of liberalizing markets. Therefore, competitiveness on global markets is becoming of paramount importance for European farmers. The challenges of global markets are accompanied by a growing array of new developments in farmers' economic and political environments, such as accelerating structural changes in the farm and agribusiness sectors, a new EU agricultural policy (decoupling and cross-compliance), and new market opportunities due to the breakthrough of renewable energies. In this article we deal with strategic decision making by German farmers who are confronted with new threats and opportunities. We develop a theoretical framework of strategic farm management based on the differentiation between different levels of strategic management, namely, corporate, competitive, functional, and cooperative strategies. We present the results of a large-scale empirical study in the German state of North Rhine–Westphalia. The empirical results show that farmers employ a broad spectrum of corporate, competitive, functional, and cooperative strategies to reposition their farms in the face of changing economic and political environments. Factor analysis reveals 5 dominant strategic factors and cluster analysis 5 strategic groups in the region under survey. The results of the study allow farmers to benchmark their farms and to identify strategic gaps in the face of globalizing markets.