Relationship between farm size and productivity

relationship between farm size and productivity

In this paper, we use farm level data for the Australian grains industry from to to investigate the relationship between farm size and. Farm size is at the heart of current policy debates over issues such What about the relationship between farm size and measured productivity. The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills. Sridhar Thapa. Department of Ecology.

relationship between farm size and productivity

The role of smallholder farmers and issues of farm size and productivity The current agriculture technology strategy and its suitability for getting smallholders out of poverty.

Where are the evidence gaps and how should these be addressed? A Paper by Professor Douglas Gollin Farm size is at the heart of current policy debates over issues such as land grabbing, land reform and the role smallholders play in the fight against hunger and malnutrition.

It is also closely linked to equity and poverty issues. To what extent should development strategies prioritize smallholder agriculture? Farms are not easily defined, and there are numerous challenges when it comes to measuring both farm size and productivity. Furthermore, definitions and methods of measurement vary across regions. For example, when does a part-time agricultural activity become a farm? Farm size can be measured in many ways: Different definitions will lead to different conclusions about the distribution of farm size and how it changes in different countries and contexts.

Measuring productivity inputs vs outputs accurately is even more challenging. Both conceptual and practical problems arise in measuring land area and quality, labor quantity, skill, effort, task and timingcapital inputs, intermediate goods quantity and qualityphysical output quantities, and prices.

Farm Size and Productivity - Lessons from Recent Literature

What differs most markedly across countries is average labor productivity. Although there is some variation in yields across countries, this pales next to differences in labor productivity. By this measure, the richest ten percent of countries are fifty times more productive, on average, than the poorest ten percent of countries. What about the relationship between farm size and measured productivity?

A large literature has tested for yield differences across farm size. Larger farms may have a smaller proportion of irrigated areas.

Inverse Relationship between Farm Size and Productivity

Hanumantha Roy and A. Sen have also advanced another reason for the higher productivity per acre on small farms. This is based upon the need of small farmers. The small farmer with a relatively smaller piece of land will try his best to get the maximum out of his land.

relationship between farm size and productivity

Psychologically, he will be keen to put his best so as to meet as much of the requirements of his family as possible from his small farm. Green Revolution and the Inverse Relationship: Under the impact of the new technology which is essentially capital-based compared with the labour based technology of the traditional agriculturethe productivity advantage hitherto enjoyed by the small farmers with relative abundance of family labour started moving in favour of the large farms which have relative abundance of land also a more easy access to capital.

Hanumantha Rao for example reached such a conclusion in He showed the weakening and even disappearance of the inverse relationship between farm size and output per acre by comparing the relationship under traditional technology during the fifties with that under new technology in the late sixties in some districts of U. Studies by Bhattacharya and Saini, Chadha and by Kapur and Kahlon, based on the data collected in the post green revolution era also showed that the inverse relationship was disappearing.

Sen and Rudra also reviewed this controversy in and they found that the inverse relationship got weakened or even disappeared in areas using new technology. According to them, no conclusion that was based upon the data for one region should be considered as valid for the whole of the country. Recently Madhusudan Ghosh has also confirmed that the inverse size-productivity relation is found to be reversed in areas undergoing technological change.

This study also confirms the above assertion. The authors found that green revolution had taken place only in one part of the District.

  • Inverse Relationship between Farm Size and Productivity
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  • The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills

Agriculture in the other region was still traditional in character. They found that whereas productivity per acre increased as the size of the farm increased in the region where green revolution had taken place, it declined with increase in the size of the farm in the region where agriculture was still traditional. They further discovered that relatively higher productivity per acre on large farms in the region where agriculture had been transformed was accompanied by a relatively greater use, per acre, of modern inputs namely fertilizers, other bio-chemical inputs and machinery.

relationship between farm size and productivity

Similarly it was found that in the region with traditional agriculture, the amount spent per acre on the modern inputs was smaller on large farms than on small farms. In other words, according to the authors the common experience in both the regions was that it was the relative position of the modern inputs in the over-all input structure on the farms which determined whether the output per acre could increase or decrease as the size of the farm increased.

Returns to Scale and the Inverse Relationship: Size-productivity relationship is essentially a relationship between output, on the one hand, and a single input i. From this relationship, some economists tried to draw inferences about the nature of returns to scale in India agriculture.

Farm size transformation and mechanization at 2017 International Conference on World Food Policy

This however, is erroneous for, the returns to scale are indicated by sum of regission coefficients of all inputs as in a Cobb-Douglas production function and not by the returns to one single input, say, land. This is the reason why the conclusions based upon the analysis of the Farm Management data that the scene of Indian agriculture is ruled by declining returns to a single input acreage are perfectly consistent with the fact that constant returns to scale are found in Indian agriculture.

These assertions have been confirmed by Khusro and Saini. The controversy regarding the inverse relationship between farm-size and productivity is not simply an academic discussion but is of fundamental significance from the point of view of economic policy. The farm-size and productivity raise many issues.

The choice occurs between: Thus, policy implications will differ depending on whether we treat the inverse relationship as an indication of higher efficiency of small farms or regard it as reflecting conditions of distress of small farms. If we accept the former position, then we would advocate that land should be transferred from larger and middle farmers to small farmers either through sales or tenancy as recommended by C.