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Economies Of Scale In Agriculture: A Reexamination Of The Evidence

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  • Kislev, Yoav
  • Peterson, Willis L.

Abstract

It is generally accepted that agricultural production is characterized by increasing returns to scale. In this paper we examine the evidence allegedly supporting this assertation and come to the conclusion that the hypothesis of increasing returns is not warranted. The essence of our argument is that if increasing returns were important we would have seen huge "food factories" dominating the industry. Instead, the dominating form of organization is the family unit and farms come in a multitude of sizes--as can be expected in a constant cost industry.

Suggested Citation

  • Kislev, Yoav & Peterson, Willis L., 1991. "Economies Of Scale In Agriculture: A Reexamination Of The Evidence," Staff Papers 13652, University of Minnesota, Department of Applied Economics.
    • Handle: RePEc:ags:umaesp:13652
    DOI: 10.22004/ag.econ.13652
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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.
    2. Marvin T. Batte & Steven T. Sonka, 1985. "Before- and After-Tax Size Economies: An Example for Cash Grain Production in Illinois," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 600-608.
    3. Ruttan, Vernon W., 1988. "Scale, Size, Technology And Structure: A Personal Perspective," Staff Papers 13832, University of Minnesota, Department of Applied Economics.
    4. Yoav Kislev & Willis Peterson, 1981. "Induced Innovations and Farm Mechanization," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(3), pages 562-565.
    5. Robert H. Hornbaker & Bruce L. Dixon & Steven T. Sonka, 1989. "Estimating Production Activity Costs for Multioutput Firms with a Random Coefficient Regression Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(1), pages 167-177.
    6. Jurg Bieri & Alain De Janvry & Schmitz Andrew, 1972. "Agricultural Technology and the Distribution of Welfare Gains," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(5), pages 801-808.
    7. Peterson, Willis & Kislev, Yoav, 1986. "The Cotton Harvester in Retrospect: Labor Displacement or Replacement?," The Journal of Economic History, Cambridge University Press, vol. 46(1), pages 199-216, March.
    8. 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.
    9. T. R. Saving, 1961. "Estimation of Optimum Size of Plant by the Survivor Technique," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 75(4), pages 569-607.
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    Cited by:

    1. Johan F. M. Swinnen & Liesbeth Dries & Karen Macours, 2005. "Transition and agricultural labor," Agricultural Economics, International Association of Agricultural Economists, vol. 32(1), pages 15-34, January.
    2. Kirsten, Johann F. & van Zyl, Johan, 1998. "Defining Small-Scale Farmers In The South African Context," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 37(4), pages 1-12, December.
    3. Marcos Gallacher, 2010. "The changing structure of production: Argentine agriculture 1988-2002," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 3-28, January-D.
    4. 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.
    5. Johnson, Nancy L. & Ruttan, Vernon W., 1994. "Why are farms so small?," World Development, Elsevier, vol. 22(5), pages 691-706, May.
    6. 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.
    7. Sara Savastano & Pasquale Lucio Scandizzo, 2009. "Optimal farm size in an uncertain land market: the case of Kyrgyz Republic," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 745-758, November.
    8. 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.
    9. Soukkhamthat, Thanongsai & Wong, Grace Y., 2016. "Technical Efficiency Analysis of Small-Scale Cassava Farming in Lao PDR," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 13(01), June.
    10. Xu, Dingde & Liu, Yi & Li, Yichao & Liu, Shaoquan & Liu, Guihua, 2024. "Effect of farmland scale on agricultural green production technology adoption: Evidence from rice farmers in Jiangsu Province, China," Land Use Policy, Elsevier, vol. 147(C).
    11. van Zyl, Johan, 1995. "The Farm Size-Efficiency Relationship In South African Commercial Agriculture," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 34(4), December.
    12. Van Zyl, Johan & Miller, Bill R. & Parker, Andrew, 1996. "Agrarian structure in Poland : the myth of large-farm superiority," Policy Research Working Paper Series 1596, The World Bank.
    13. Peterson, Willis L., 1991. "Relation Between Crop Yields And Estimated Returns To Scale And Returns To Research," Staff Papers 13430, University of Minnesota, Department of Applied Economics.
    14. Chiarella, Cristina & Meyfroidt, Patrick & Abeygunawardane, Dilini & Conforti, Piero, 2023. "Balancing the trade-offs between land productivity, labor productivity and labor intensity," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 52(10), pages 1618-1634.

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