Agricultural Potential of the EU Countries: How Far Are They from the USA?

Abstract

Although the EU and the USA are the largest players in the global agricultural market, there are only a few up-to-date comparative studies concerning their agricultural potential and performance. No comprehensive study covering all individual EU member states in relation to the USA has been provided so far. Considering that in the light of the lasting impasse in the negotiations on both international and transatlantic trade liberalization, differences in the production structures seem to be a decisive factor affecting competitiveness of the EU and the US agriculture, the paper attempts to identify the gap in the agricultural potential between individual EU countries and the USA and determine which EU countries are able to face the competitive pressure exerted by the US agricultural producers. Ward’s agglomerative hierarchical clustering method with the Euclidean distance was used to separate the most and the least competitive countries depending on their agricultural potential. Based on the conducted analyses it may be stated that the US agriculture is characterized by more rational ratios between production factors, resulting in their higher efficiency compared to the EU. The conducted typological analysis showed that thanks to the high standard of capital assets per employee leading to high labor productivity, only such countries as Germany, the Netherlands, France, Denmark, and Belgium may be considered as capable of meeting the competitive pressure exerted by the US agriculture with its greater degree of concentration and benefits from proper proportions between the production factors. A much more difficult competitive situation is observed in the EU countries of Central and Eastern Europe as well as the Mediterranean region, specializing in land- and labor-intensive production, in which the rational utilization of the production potential is limited by the structural deficit, resulting from the fragmented agrarian structure and manifested in the low level of land and capital assets assigned to labor actively involved in the production process.