Urbanization and the industrialization of agriculture

As urban environments expand, urban pressure is likely to generate increased competition for resources used in the agricultural sector, such as land and labor. We assess the effects of this urban pressure on the size and exit patterns for local farms. Our results suggest that the effects of urbanization on nearby farms are fundamentally heterogeneous. Increasing urban pressure causes smaller farms in neighboring areas to downsize or exit the industry, whereas large farms scale up in the face of growing urban pressures. In other words, local competition for resources as a result of urbanization can serve as an important mechanism for agricultural industrialization.