Functional Fragmentation as a Structural Determinant of Agricultural Competitiveness: Evidence from the European Union

Agriculture in the European Union operates within a complex environment shaped by biological constraints, technological change, institutional frameworks and increasing climate variability. While existing research has largely explained agricultural competitiveness through productivity, technological adoption or policy incentives, less attention has been given to how the internal organisation of production-related functions constrains performance. This study addresses that gap by empirically examining the role of agricultural functional fragmentation and structural incompatibility in shaping agricultural competitiveness across EU Member States over the period 2004–2023. Unlike related concepts such as structural complexity, diversification or farm management complexity, which describe the variety of activities within agricultural systems, this framework focuses on the simultaneity and biological rigidity of core functions that must be coordinated in parallel, generating cumulative coordination burdens. Using harmonised data from FAOSTAT, FADN, WDI, WGI and WMO, the analysis constructs a multidimensional competitiveness index and a system-level measure of functional fragmentation. The empirical strategy combines descriptive analysis with fixed-effects panel regressions, interaction models, instrumental-variable estimations and extensive robustness checks. The results show that higher functional fragmentation is consistently associated with lower agricultural competitiveness, while technological intensity exerts a stable positive effect. Climate anomalies over the observed period are linked to modest average performance gains rather than losses, and institutional quality alone does not offset structural constraints. Overall, the findings highlight functional fragmentation as a persistent structural determinant of agricultural competitiveness and underscore the importance of system-level coordination alongside technological progress.