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Are Large Farms More Efficient?

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  • Peterson, Willis L.

Abstract

Accurate estimates of returns to scale require that inputs and output are measured without error and that environmental and managerial differences among firms of varying sizes are taken into account. Measurement problems affecting estimates of returns to scale in agriculture include: (1) combining the farm dwelling with capital inputs, (2) correlation of environmental and management characteristics with size and (3) the effect of off-farm employment on small farm output and production costs. Estimates of long run average total cost curves for farms in the corn belt reveal that after the above factors are taken into account, estimated scale economies in agriculture disappear, while there is evidence of diseconomies as farm size increases.

Suggested Citation

  • Peterson, Willis L., 1997. "Are Large Farms More Efficient?," Staff Papers 13411, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:13411
    DOI: 10.22004/ag.econ.13411
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    References listed on IDEAS

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    1. Giancarlo Moschini, 1990. "Nonparametric and Semiparametric Estimation: An Analysis of Multiproduct Returns to Scale," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 589-596.
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    4. Kumbhakar, Subal C & Biswas, Basudeb & Bailey, DeeVon, 1989. "A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 595-604, November.
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    3. Rogier van den Brink & Glen Thomas & Hans Binswanger & John Bruce & Frank Byamugisha, 2005. "Consensus, Confusion, and Controversy : Selected Land Reform Issues in Sub-Saharan Africa," World Bank Publications - Books, The World Bank Group, number 7387.
    4. Dries, Liesbeth & Swinnen, Johan F. M., 2002. "Institutional Reform and Labor Reallocation During Transition: Theory Evidence From Polish Agriculture," World Development, Elsevier, vol. 30(3), pages 457-474, March.
    5. Erik Mathijs & Johan F. M. Swinnen, 2001. "Production Organization And Efficiency During Transition: An Empirical Analysis Of East German Agriculture," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 100-107, February.
    6. Glen Morris & Shawn Ehlers & John Shutske, 2023. "U.S. Small-Scale Livestock Operation Approach to Biosecurity," Agriculture, MDPI, vol. 13(11), pages 1-10, November.
    7. Mathijs, Erik & Swinnen, Johan F M, 1998. "The Economics of Agricultural Decollectivization in East Central Europe and the Former Soviet Union," Economic Development and Cultural Change, University of Chicago Press, vol. 47(1), pages 1-26, October.
    8. Morrison Paul, Catherine J. & Nehring, Richard F. & Banker, David E. & Breneman, Vincent E., 2001. "Productivity Growth, Technological Progress, and Technical Efficiency in the Heartland and Southern Cotton States:1996-1999," 2001 Annual meeting, August 5-8, Chicago, IL 20679, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Fertő, Imre, 2002. "A mezőgazdasági termelés szerkezetének változásai a fejlett országokban, II. Az üzemnagyság és a mérethozadék problémája a mezőgazdaságban [Changes in the structure of agricultural production in th," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 760-773.
    10. Zegar, Józef S., 2012. "Gospodarstwa Rodzinne Wobec Wyzwań Wyżywienia I Ochrony Środowiska – Ujęcie Globalne," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 4(157).

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    Keywords

    Farm Management; Productivity Analysis;

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