IDEAS home Printed from https://ideas.repec.org/a/bla/ajarec/v59y2015i1p16-38.html
   My bibliography  Save this article

Productivity and farm size in Australian agriculture: reinvestigating the returns to scale

Author

Listed:
  • Yu Sheng
  • Shiji Zhao
  • Katarina Nossal
  • Dandan Zhang

Abstract

type="main" xml:id="ajar12063-abs-0001"> A positive relationship between farm size and farm productivity is often considered to be largely due to increasing returns to scale in farm production. However, using farm-level data for the Australian broadacre industry, we found that constant or mildly decreasing returns to scale is the more typical scenario. In this study, the marginal returns to various farm inputs are compared across farms with different sizes. We found that large farms achieved higher productivity by changing production technology rather than increasing scale alone. The results highlight the disparity between ‘returns to scale’ and ‘returns to size’ in the industry, suggesting that productivity improvement among smaller farms can be made through increasing their ability to access advanced technologies, rather than simply expanding their scale.

Suggested Citation

  • Yu Sheng & Shiji Zhao & Katarina Nossal & Dandan Zhang, 2015. "Productivity and farm size in Australian agriculture: reinvestigating the returns to scale," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), pages 16-38, January.
    • Handle: RePEc:bla:ajarec:v:59:y:2015:i:1:p:16-38
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/ajar.2015.59.issue-1
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arne Hallam, 1991. "Economies of Size and Scale in Agriculture: An Interpretive Review of Empirical Measurement," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 13(1), pages 155-172.
    2. Hughes, Neal & Lawson, Kenton & Davidson, Alistair & Jackson, Tom & Sheng, Yu, 2011. "Productivity pathways: climate-adjusted production frontiers for the Australian broadacre cropping industry," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100563, Australian Agricultural and Resource Economics Society.
    3. Jean-Paul Chavas, 2008. "On the economics of agricultural production ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(4), pages 365-380, December.
    4. McClelland, John W. & Wetzstein, Michael E. & Musser, Wesley N., 1986. "Returns To Scale And Size In Agricultural Economics," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 11(2), pages 1-5, December.
    5. Unknown, 2005. "Trends in Australian Agriculture," Commission Research Papers 31903, Productivity Commission.
    6. Productivity Commission, 2005. "Trends in Australian Agriculture," Research Papers 0502, Productivity Commission, Government of Australia.
    7. Boussemart, Jean-Philippe & Briec, Walter & Peypoch, Nicolas & Tavéra, Christophe, 2009. "[alpha]-Returns to scale and multi-output production technologies," European Journal of Operational Research, Elsevier, vol. 197(1), pages 332-339, August.
    8. Chavas, Jean-Paul, 2001. "Structural change in agricultural production: Economics, technology and policy," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 5, pages 263-285, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sheng, Yu & Zhao, Shiji & Nossal, Katarina & Zhang, Dandan, 2015. "Productivity and farm size in Australian agriculture: reinvestigating the returns to scale," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), January.
    2. Nazrul Islam & Vilaphonh Xayavong & Ross Kingwell, 2014. "Broadacre farm productivity and profitability in south-western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), pages 147-170, April.
    3. Mullen, John & Keogh, Mick, 2013. "The Future Productivity and Competitiveness Challenge for Australian Agriculture," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152170, Australian Agricultural and Resource Economics Society.
    4. Kingwell, Ross S., 2010. "Managing Complexity in Modern Farming," 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia 59090, Australian Agricultural and Resource Economics Society.
    5. Deepananda Herath & Alfons Weersink, 2007. "Peasants and plantations in the Sri Lankan tea sector: causes of the change in their relative viability ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(1), pages 73-89, March.
    6. Fleming, Euan M., 2007. "Use of the single factoral terms of trade to analyse agricultural production," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 1-7.
    7. Atifa Asghari & Yuriy Kuleshov & Andrew B. Watkins & Jessica Bhardwaj & Isabella Aitkenhead, 2021. "Improving drought resilience in Northern Murray-Darling Basin farming communities: Is forecast-based financing suitable?," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 109(1), pages 1221-1245, October.
    8. Kym Anderson & Peter Lloyd & Donald Maclaren, 2007. "Distortions to Agricultural Incentives in Australia Since World War II," The Economic Record, The Economic Society of Australia, vol. 83(263), pages 461-482, December.
    9. Swetlana Renner & Thomas Glauben & Heinrich Hockmann, 2014. "Measurement and decomposition of flexibility of multi-output firms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 41(5), pages 745-773.
    10. Stewart, Fraser & Kragt, Marit & Gibson, Fiona, 2015. "Farmers’ perceptions of foreign investment in Western Australian broadacre agriculture," Working Papers 198540, University of Western Australia, School of Agricultural and Resource Economics.
    11. Randall, Alan, 2008. "Is Australia on a sustainability path? Interpreting the clues," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 1-19.
    12. Matthew Gray & Monica Howlett & Boyd Hunter, 2014. "Labour market outcomes for Indigenous Australians," The Economic and Labour Relations Review, , vol. 25(3), pages 497-517, September.
    13. Kingwell, Ross S., 2011. "Managing complexity in modern farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 1-23.
    14. Anderson, Kym & Lattimore, Ralph G. & Lloyd, Peter J. & MacLaren, Donald, 2007. "Distortions to Agricultural Incentives in Australia and New Zealand," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 10407, Australian Agricultural and Resource Economics Society.
    15. Kingwell, Ross S., 2006. "Is Hanrahan sort of right? Will climate change ruin us all?," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 137961, Australian Agricultural and Resource Economics Society.
    16. Lawes, R.A. & Kingwell, R.S., 2012. "A longitudinal examination of business performance indicators for drought-affected farms," Agricultural Systems, Elsevier, vol. 106(1), pages 94-101.
    17. Mugera, Amin W., 2010. "Does Good Personnel Management Practices give Agribusiness Firms a Competitive Advantage?," 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia 59105, Australian Agricultural and Resource Economics Society.
    18. Blancard, Stéphane & Boussemart, Jean-Philippe & Chavas, Jean-Paul & Leleu, Hervé, 2016. "Potential gains from specialization and diversification further to the reorganization of activities," Omega, Elsevier, vol. 63(C), pages 60-68.
    19. Tony Sorensen, 2015. "Regional development in an age of accelerating complexity and uncertainty: Towards survival strategies for a sparsely settled continent," Local Economy, London South Bank University, vol. 30(1), pages 41-52, February.
    20. Mullen, John D. & Scobie, Grant M. & Crean, Jason, 2006. "Trends in Research, Productivity Growth and Competitiveness in Agriculture in New Zealand and Australia," 2006 Conference, August 24-25, 2006, Nelson, New Zealand 31965, New Zealand Agricultural and Resource Economics Society.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ajarec:v:59:y:2015:i:1:p:16-38. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.