In this study we use system dynamics to evaluate possible development scenarios of agricultural sector in Latvia. Growth and balancing forces of agricultural economic are investigated along with dynamics of capital, land and labor allocation. Resource stocks are considered from two perspectives: a) breakdown between crop and livestock farming activities b) allocation between commercial and self-subsistence farms. Total production output and per-capita income of the population employed in the sector are chosen as key development indicators. Impact and efficiency of public support policies for agriculture are discussed.