[Publication] The Bioeconomy in the Agriculture of the Future

Background

Agriculture stands as a central pillar of the European bioeconomy, serving as the primary source of biomass and a fundamental actor in the transition towards a sustainable, circular, and
climate-neutral economy by 2050. The sector is currently undergoing a paradigm shift, moving from a narrow focus on primary commodity production to a systemic role as a provider of multi-functional services and renewable resources. This transition to a circular bioeconomy (CBE) provides critical opportunities for income diversification and risk reduction for farmers by transforming agricultural residues and by-products into high-value bio-based products and renewable energy. Despite this potential, the development of the bioeconomy remains uneven across EU Member States due to fragmented policy frameworks, varying levels of technological readiness, and significant barriers to scaling innovations. The bioeconomy must move beyond isolated pilot projects toward robust, market-driven value chains that are deeply embedded in agricultural policy.

Aim of the Study

• Outline a strategic roadmap for the integration of circular bioeconomy models into future EU agricultural frameworks to enhance farm-level economic resilience;
• Identify the structural and institutional determinants required to scale successful bioeconomy initiatives from regional pilot cases to mainstream agricultural practice; and
• Define concrete policy pathways to strengthen the position of primary producers within
  bio-based value chains while resolving competition for land and resources.

Findings and Trends

The study identifies several driving forces shaping the agricultural bioeconomy. A key trend is the integration with the circular economy, which emphasizes the closing of nutrient loops and the reduction of waste. Technological innovation, including precision farming and advanced biotechnologies, is accelerating the transition, though it also creates a “digital and technological divide” between regions. Key findings include:

• Income Diversification – the relationship between bioeconomy engagement and farm income stability is complex and context-dependent. While diversification into other gainful activities (OGA) may reduce dependence on a single commodity market, the empirical analysis shows that farms with higher OGA shares tend to exhibit greater income variability rather than lower. Stable contractual arrangements and policy support are therefore important preconditions for making diversification economically viable.
• The “Residues-First” Principle – to avoid competition with food production, successful models prioritize the valorisation of underutilised by-products such as straw, manure, and processing waste.
• Cascading Use – prioritising material use (bioproducts) before energy recovery ensures maximum added value and resource efficiency.
• Economic Performance – farms with higher bioeconomy engagement tend to show lower agricultural income per hectare compared to less diversified farms. This reflects structural differences between farm types rather than a simple causal trade-off, and the drivers behind this association remain an open empirical question.
• Policy Support as Income Stabiliser – the empirical analysis shows that farms receiving higher subsidies per hectare exhibit measurably lower income variability, suggesting that
  well-designed public support can partially offset the destabilising effects associated with bioeconomy diversification and high capital intensity.

Successful Models and Structural Drivers

The analysis of successful initiatives across the EU reveals several critical factors for scaling the bioeconomy:

• Collective Structures – cooperatives and producer groups are vital for aggregating biomass supply, sharing high investment risks, and ensuring farmers capture a fair share of the value added.
• Regional Embeddedness – “industrial symbiosis” at the local level, where the waste of one process becomes the raw material for another, reduces transport costs and strengthens rural economies.
• Knowledge and Innovation – access to technical and managerial skills through Agricultural Knowledge and Innovation Systems (AKIS) is a prerequisite for farmers to adopt complex bioeconomy solutions.
• Market Signals – long-term contractual frameworks and standardized quality parameters for biomass are essential to make bio-based investments “bankable” for private investors.

Regulatory and Market Barriers Limiting Development

Despite clear benefits, the adoption of bioeconomy models in mainstream agricultural practice faces several structural obstacles. One of the most significant is regulatory uncertainty and administrative burden associated with waste management and harmonised quality standards. In many cases, agricultural by-products are still classified as waste rather than secondary raw materials, complicating their further processing and trade. Legislative fragmentation hinders the development of value chains and discourages investors from committing to long-term projects. The study also highlights the risk of biomass price volatility.

Economic Impact Assessment Model

This study introduces a new incremental assessment model that quantifies the economic impacts of bioeconomy activities at the farm level. The model evaluates four dimensions: costs and input savings, revenues and diversification, value added, and resilience. Findings call for a differentiated and evidence-based approach to bioeconomy policy design, backed by a combination of public support tools.

Policy Options for the EU

To foster a scalable and inclusive bioeconomy, the study proposes several policy pathways, some of which are complementary:

• Strategically Targeted Common Agricultural Policy (CAP) for Bioeconomy Scaling (Option A): The post-2027 CAP should integrate the bioeconomy as a horizontal priority. A key instrument should be the introduction of specific schemes that reward farmers for circular nutrient management and the production of renewable raw materials beyond traditional food production. Support must shift from isolated measures toward integrated risk-sharing models.
• Value-Chain Contracts and Standards (Option B): To reduce market uncertainty, the broader use of written contractual frameworks is essential, including transparent pricing formulas and risk-sharing mechanisms. Simultaneously, establishing harmonized quality standards for agricultural residues and by-products (e.g., moisture content, purity) is a prerequisite for reducing transaction costs and enabling the industrial integration of bio-based value chains.
• “Residues First” Principle to Manage Land Competition (Option C): Policy should prioritize the valorization of by-products and waste streams over the cultivation of dedicated crops for energy or materials. This approach minimizes competition with food production and nature conservation.
• Investment Packages and Financial Instruments (Option D): Given the high capital intensity of bioeconomy technologies (e.g., biorefineries, biogas plants), it is necessary to combine traditional grants with financial instruments such as guarantees and concessional loans, particularly in cooperation with the European Investment Bank (EIB).

Strengthening Capacities and Advisory Services via AKIS (Option E): AKIS must be reinforced so that advisors can function as innovation brokers. They should assist farmers with biomass flow planning, contract negotiations, carbon footprint certification, and digital monitoring.