You are here: ILREconomic and Agricultural PolicyResearch DFG - Structural change in dairy chain (2015-2018)


Understanding spatial interactions and structural change in the dairy production chain with a dynamic regional Agent Based Model covering dairy farms and dairy processing

DFG Individual Grant (5/2015-5/2018)


The central hypotheses to be investigated in this research project is that farm structural change in the German dairy sector is the outcome of the interaction between processes at the farm and processing level and that an improved understanding of these processes can be reached by the application of Agent Based Modelling (ABM), which allows to explicitly depict spatial interactions.


We therefore combine two strands of the literature in this research project:

  • the analysis of structural change at farm level and
  • structural change analysis at the dairy processing level.

A special focus will be on the use of ABM and explicit modeling of interaction between farms or dairies and farms as this stands at the center of our proposal. Information on the ABM to be used and further developed in the project can be found on the ABMSIM web page.


The objective of this research project is to understand the complex dynamic interaction between farm level structural change and changes on the raw milk processing stage and the resulting economic and environmental consequences for the agricultural sector, by conducting simulations for different regions with an ABM. The specific objectives of this project are the following:

  • Objective 1: To develop a methodology to derive appropriate meta-models, reflecting different planning horizons, from a complex farm model and apply it to the parameterization of farm agents in the ABM
  • Objective 2: To develop a behavioral model for dairies including investment decisions that describes spatial competition in raw milk markets for integration in the ABM
  • Objective 3: To develop other key modules in the ABM such as a farm exit, farmland rental or dairy processing capacity adjustment module
  • Objective 4: To integrate the results from objectives 1 - 3 into a dynamic ABM that than allows the modeling of spatially explicit the interaction between structural change at farm and processing level in the dairy production chain
  • Objective 5: To understand how different structural starting conditions and different behavioral assumption impact structural change at farm and processing level, based on systematic scenario applications of the ABM

Given the integration of the farm and processing level in one ABM, this offers unique and innovative insights into determinants and interactions effects of structural change. The dairy sector is well suited for this analysis as there is this nearly perfect linkage between production and processing as only very little milk is sold directly at farm level. The expected outcomes are of relevance for the dairy farm sector and the dairy production chain as dairy production is an economically important part of the agricultural and food business. For the farm sectors, the regional structural change in the dairy sector has important implicit repercussions for regional land markets and landscapes. The medium- to long-term international competitiveness of the German dairy companies depends on the functioning and cost-efficient input sourcing.

Staff at ILR working on the project:

Principle Investigators:

PhD students:

Documents related to the project

Methodological and technical documentation of the prototype version of ABM model

ODD+D based documentation of the main characteristica of the ABM model

FARMDYN model documentation

Publications related to the project

Britz, W., Wieck, C. (2014): Analyzing structural change in dairy farming based on an Agent Based Model Download....

Last updated: Thursday, January 05, 2017