IDEAS home Printed from https://ideas.repec.org/p/wbk/wbrwps/6770.html
   My bibliography  Save this paper

Is there a farm-size productivity relationship in African agriculture ? evidence from Rwanda

Author

Listed:
  • Ali, Daniel Ayalew
  • Deininger, Klaus

Abstract

Whether the negative relationship between farm size and productivity that is confirmed in a large global literature holds in Africa is of considerable policy relevance. This paper revisits this issue and examines potential causes of the inverse productivity relationship in Rwanda, where policy makers consider land fragmentation and small farm sizes to be key bottlenecks for the growth of the agricultural sector. Nationwide plot-level data from Rwanda point toward a constant returns to scale crop production function and a strong negative relationship between farm size and output per hectare as well as intensity of labor use that is robust across specifications. The inverse relationship continues to hold if profits with family labor valued at shadow wages are used, but disappears if family labor is rather valued at village-level market wage rates. These findings imply that, in Rwanda, labor market imperfections, rather than other unobserved factors, seem to be a key reason for the inverse farm-size productivity relationship.

Suggested Citation

  • Ali, Daniel Ayalew & Deininger, Klaus, 2014. "Is there a farm-size productivity relationship in African agriculture ? evidence from Rwanda," Policy Research Working Paper Series 6770, The World Bank.
    • Handle: RePEc:wbk:wbrwps:6770
    as

    Download full text from publisher

    File URL: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/02/06/000158349_20140206091322/Rendered/PDF/WPS6770.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, vol. 51(2), pages 193-215, December.
    2. Michael R. Carter & Keith D. Wiebe, 1990. "Access to Capital and Its Impact on Agrarian Structure and Productivity in Kenya," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1146-1150.
    3. Helfand, Steven M. & Levine, Edward S., 2004. "Farm size and the determinants of productive efficiency in the Brazilian Center-West," Agricultural Economics, Blackwell, vol. 31(2-3), pages 241-249, December.
    4. Mark R. Rosenzweig & Kenneth I. Wolpin, 1985. "Specific Experience, Household Structure, and Intergenerational Transfers: Farm Family Land and Labor Arrangements in Developing Countries," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 100(Supplemen), pages 961-987.
    5. Barrett, Christopher B. & Bellemare, Marc F. & Hou, Janet Y., 2010. "Reconsidering Conventional Explanations of the Inverse Productivity-Size Relationship," World Development, Elsevier, vol. 38(1), pages 88-97, January.
    6. Daniel Ayalew Ali & Klaus Deininger & Markus Goldstein, 2011. "Environmental and Gender Impacts of Land Tenure Regularization in Africa," World Bank Publications - Reports 25527, The World Bank Group.
    7. Collier Paul & Venables Anthony J., 2012. "Land Deals in Africa: Pioneers and Speculators," Journal of Globalization and Development, De Gruyter, vol. 3(1), pages 1-22, June.
    8. Carletto, Calogero & Savastano, Sara & Zezza, Alberto, 2013. "Fact or artifact: The impact of measurement errors on the farm size–productivity relationship," Journal of Development Economics, Elsevier, vol. 103(C), pages 254-261.
    9. Kentaro Kawasaki, 2010. "The costs and benefits of land fragmentation of rice farms in Japan ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 509-526, October.
    10. Lamb, Russell L., 2003. "Inverse productivity: land quality, labor markets, and measurement error," Journal of Development Economics, Elsevier, vol. 71(1), pages 71-95, June.
    11. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1995. "Power, distortions, revolt and reform in agricultural land relations," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 42, pages 2659-2772, Elsevier.
    12. Klaus Deininger & Songqing Jin, 2008. "Land Sales and Rental Markets in Transition: Evidence from Rural Vietnam," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 67-101, February.
    13. Hanan G. Jacoby, 1993. "Shadow Wages and Peasant Family Labour Supply: An Econometric Application to the Peruvian Sierra," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 60(4), pages 903-921.
    14. Zhuo Chen & Wallace E. Huffman & Scott Rozelle, 2011. "Inverse Relationship Between Productivity And Farm Size: The Case Of China," Contemporary Economic Policy, Western Economic Association International, vol. 29(4), pages 580-592, October.
    15. Deininger, Klaus & Savastano, Sara & Carletto, Calogero, 2012. "Land Fragmentation, Cropland Abandonment, and Land Market Operation in Albania," World Development, Elsevier, vol. 40(10), pages 2108-2122.
    16. Ayal Kimhi, 2006. "Plot size and maize productivity in Zambia: is there an inverse relationship?," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 1-9, July.
    17. Fidele Byiringiro & Thomas Reardon, 1996. "Farm productivity in Rwanda: effects of farm size, erosion, and soil conservation investments," Agricultural Economics, International Association of Agricultural Economists, vol. 15(2), pages 127-136, November.
    18. Frisvold, George B., 1994. "Does supervision matter? Some hypothesis tests using Indian farm-level data," Journal of Development Economics, Elsevier, vol. 43(2), pages 217-238, April.
    19. Ali, Daniel Ayalew & Deininger, Klaus & Goldstein, Markus, 2014. "Environmental and gender impacts of land tenure regularization in Africa: Pilot evidence from Rwanda," Journal of Development Economics, Elsevier, vol. 110(C), pages 262-275.
    20. Bardhan, Pranab K, 1973. "Size, Productivity, and Returns to Scale: An Analysis of Farm-Level Data in Indian Agriculture," Journal of Political Economy, University of Chicago Press, vol. 81(6), pages 1370-1386, Nov.-Dec..
    21. Bhalla, Surjit S & Roy, Prannoy L, 1988. "Mis-specification in Farm Productivity Analysis: The Role of Land Quality," Oxford Economic Papers, Oxford University Press, vol. 40(1), pages 55-73, March.
    22. Donald F. Larson & Keijiro Otsuka & Tomoya Matsumoto & Talip Kilic, 2014. "Should African rural development strategies depend on smallholder farms? An exploration of the inverse-productivity hypothesis," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 355-367, May.
    23. Derek Byerlee & Klaus Deininger, 2013. "The Rise of Large Farms in Land-Abundant Countries: Do They Have a Future?," Palgrave Macmillan Books, in: Stein T. Holden & Keijiro Otsuka & Klaus Deininger (ed.), Land Tenure Reform in Asia and Africa, chapter 14, pages 333-353, Palgrave Macmillan.
    24. Deininger, Klaus & Feder, Gershon, 2001. "Land institutions and land markets," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 6, pages 288-331, Elsevier.
    25. Carter, Michael R, 1984. "Identification of the Inverse Relationship between Farm Size and Productivity: An Empirical Analysis of Peasant Agricultural Production," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 131-145, March.
    26. Rosenzweig, Mark R & Binswanger, Hans P, 1993. "Wealth, Weather Risk and the Composition and Profitability of Agricultural Investments," Economic Journal, Royal Economic Society, vol. 103(416), pages 56-78, January.
    27. Unknown, 2005. "Agriculture In Transition," Economics of Agriculture, Institute of Agricultural Economics, vol. 52(1).
    28. Cornia, Giovanni Andrea, 1985. "Farm size, land yields and the agricultural production function: An analysis for fifteen developing countries," World Development, Elsevier, vol. 13(4), pages 513-534, April.
    29. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law and Economics, University of Chicago Press, vol. 41(2), pages 343-386, October.
    30. Daniel Ayalew Ali & Klaus Deininger & Markus Goldstein, 2011. "Environmental and Gender Impacts of Land Tenure Regularization in Africa," World Bank Other Operational Studies 25527, The World Bank.
    31. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-498, June.
    32. Benjamin, Dwayne, 1995. "Can unobserved land quality explain the inverse productivity relationship?," Journal of Development Economics, Elsevier, vol. 46(1), pages 51-84, February.
    33. Foster, Andrew D. & Rosenzweig, Mark R., 2010. "Is There Surplus Labor in Rural India?," Center Discussion Papers 95273, Yale University, Economic Growth Center.
    34. Andrew Dorward, 1999. "Farm size and productivity in Malawian smallholder agriculture," Journal of Development Studies, Taylor & Francis Journals, vol. 35(5), pages 141-161.
    35. Michael Kevane, 1996. "Agrarian Structure and Agricultural Practice: Typology and Application to Western Sudan," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 236-245.
    36. Juliano J. Assunção & Luis H. B. Braido, 2007. "Testing Household-Specific Explanations for the Inverse Productivity Relationship," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 980-990.
    37. Klaus Deininger & Derek Byerlee & Jonathan Lindsay & Andrew Norton & Harris Selod & Mercedes Stickler, 2011. "Rising Global Interest in Farmland : Can it Yield Sustainable and Equitable Benefits?," World Bank Publications - Books, The World Bank Group, number 2263.
    38. Robert Evenson & Prabhu Pingali (ed.), 2010. "Handbook of Agricultural Economics," Handbook of Agricultural Economics, Elsevier, edition 1, volume 4, number 1.
    39. Anil B. Deolalikar, 1981. "The Inverse Relationship between Productivity and Farm Size: A Test Using Regional Data from India," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(2), pages 275-279.
    40. Ernst R. Berndt & Laurits R. Christensen, 1973. "The Internal Structure of Functional Relationships: Separability, Substitution, and Aggregation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(3), pages 403-410.
    41. Heltberg, Rasmus, 1998. "Rural market imperfections and the farm size-- productivity relationship: Evidence from Pakistan," World Development, Elsevier, vol. 26(10), pages 1807-1826, October.
    42. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 297-313, August.
    43. Assuncao, Juliano J. & Ghatak, Maitreesh, 2003. "Can unobserved heterogeneity in farmer ability explain the inverse relationship between farm size and productivity," Economics Letters, Elsevier, vol. 80(2), pages 189-194, August.
    44. George E. Battese, 1997. "A Note On The Estimation Of Cobb‐Douglas Production Functions When Some Explanatory Variables Have Zero Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 250-252, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Charles Onyutha, 2018. "African crop production trends are insufficient to guarantee food security in the sub-Saharan region by 2050 owing to persistent poverty," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(5), pages 1203-1219, October.
    2. Andrew D. Foster & Mark R. Rosenzweig, 2022. "Are There Too Many Farms in the World? Labor Market Transaction Costs, Machine Capacities, and Optimal Farm Size," Journal of Political Economy, University of Chicago Press, vol. 130(3), pages 636-680.
    3. Kyalo Willy, Daniel & Muyanga, Milu & Jayne, Thomas, 2019. "Can economic and environmental benefits associated with agricultural intensification be sustained at high population densities? A farm level empirical analysis," Land Use Policy, Elsevier, vol. 81(C), pages 100-110.
    4. Zahra Didarali & James Gambiza, 2019. "Permaculture: Challenges and Benefits in Improving Rural Livelihoods in South Africa and Zimbabwe," Sustainability, MDPI, vol. 11(8), pages 1-19, April.
    5. Silvia Silvestri & Martin Macharia & Bellancile Uzayisenga, 2019. "Analysing the potential of plant clinics to boost crop protection in Rwanda through adoption of IPM: the case of maize and maize stem borers," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(2), pages 301-315, April.
    6. DJOKOTO, Justice G. & BADU-PRAH, Charlotte & GIDIGLO, Ferguson K. & SROFENYOH, Francis Y. & AGYEI-HENAKU, Kofi Aaron A-O. & AFRANE ARTHUR, Akua A., 2022. "Farm Size And Efficiency Nexus: Evidence From A Meta-Regression," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 25(1), March.
    7. Lu, Hua & Xie, Hualin & He, Yafen & Wu, Zhilong & Zhang, Xinmin, 2018. "Assessing the impacts of land fragmentation and plot size on yields and costs: A translog production model and cost function approach," Agricultural Systems, Elsevier, vol. 161(C), pages 81-88.
    8. Thomas Markussen & Finn Tarp & Do Huy Thiep & Nguyen Do Anh Tuan, 2016. "Inter- and intra-farm land fragmentation in Vietnam," WIDER Working Paper Series 011, World Institute for Development Economic Research (UNU-WIDER).
    9. Thomas Markussen & Finn Tarp & Do Huy Thiep & Nguyen Do Anh Tuan, 2016. "Inter- and intra-farm land fragmentation in Vietnam," WIDER Working Paper Series wp-2016-11, World Institute for Development Economic Research (UNU-WIDER).
    10. Carletto,Calogero & Dillon,Andrew S. & Zezza,Alberto, 2021. "Agricultural Data Collection to Minimize Measurement Error and Maximize Coverage," Policy Research Working Paper Series 9745, The World Bank.
    11. Desiere, Sam & Niragira, Sanctus & D'Haese, Marijke, 2016. "Cow or Goat? Population pressure and livestock keeping in Burundi," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 54(3), January.
    12. Desiere, Sam & D'Haese, Marijke, 2015. "Boserup versus Malthis: does population pressure drive agricultural intensification? Evidence from Burundi," 2015 Conference, August 9-14, 2015, Milan, Italy 211571, International Association of Agricultural Economists.
    13. Pierre Damien Ntihinyurwa & Walter Timo de Vries, 2021. "Farmland Fragmentation, Farmland Consolidation and Food Security: Relationships, Research Lapses and Future Perspectives," Land, MDPI, vol. 10(2), pages 1-39, January.
    14. Yishao Shi & Qianqian Yang & Liangliang Zhou & Shouzheng Shi, 2022. "Can Moderate Agricultural Scale Operations Be Developed against the Background of Plot Fragmentation and Land Dispersion? Evidence from the Suburbs of Shanghai," Sustainability, MDPI, vol. 14(14), pages 1-22, July.
    15. Ning Geng & Mengyao Wang & Zengjin Liu, 2022. "Farmland Transfer, Scale Management and Economies of Scale Assessment: Evidence from the Main Grain-Producing Shandong Province in China," Sustainability, MDPI, vol. 14(22), pages 1-16, November.
    16. Musafiri, Ildephonse & von Braun, Joachim, 2016. "Long-term structural change and determinants of agricultural output in small-scale farming in Rwanda," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 11(4), pages 1-12, December.
    17. Daniel Micheal Okello & Jackline Bonabana-Wabbi & Basil Mugonola, 2019. "Farm level allocative efficiency of rice production in Gulu and Amuru districts, Northern Uganda," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 7(1), pages 1-19, December.

    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. Klaus Deininger & Denys Nizalov & Sudhir K Singh, 2013. "Are mega-farms the future of global agriculture? Exploring the farm size-productivity relationship for large commercial farms in Ukraine," Discussion Papers 49, Kyiv School of Economics.
    2. Deininger, Klaus & Nizalov, Denys & Singh, Sudhir K, 2013. "Are mega-farms the future of global agriculture ? exploring the farm size-productivity relationship," Policy Research Working Paper Series 6544, The World Bank.
    3. Deininger, Klaus & Jin, Songqing & Liu, Yanyan & Singh, Sudhir, 2015. "Labor Market Performance and the Farm Size-Productivity Relationship in Rural India," 2015 Conference, August 9-14, 2015, Milan, Italy 212720, International Association of Agricultural Economists.
    4. Steven Helfand & Matthew Taylor, 2018. "The Inverse Relationship between Farm Size and Productivity: Refocusing the Debate," Working Papers 201811, University of California at Riverside, Department of Economics.
    5. Larson,Donald F. & Muraoka,Rie & Otsuka,Keijiro, 2016. "On the central role of small farms in African rural development strategies," Policy Research Working Paper Series 7710, The World Bank.
    6. Donald F. Larson & Keijiro Otsuka & Tomoya Matsumoto & Talip Kilic, 2014. "Should African rural development strategies depend on smallholder farms? An exploration of the inverse-productivity hypothesis," Agricultural Economics, International Association of Agricultural Economists, vol. 45(3), pages 355-367, May.
    7. Desiere, Sam & Jolliffe, Dean, 2018. "Land productivity and plot size: Is measurement error driving the inverse relationship?," Journal of Development Economics, Elsevier, vol. 130(C), pages 84-98.
    8. Kimhi, Ayal, 2003. "Plot Size And Maize Productivity In Zambia: The Inverse Relationship Re-Examined," Discussion Papers 14980, Hebrew University of Jerusalem, Department of Agricultural Economics and Management.
    9. Klaus Deininger & Songqing Jin & Yanyan Liu & Sudhir K. Singh, 2018. "Can Labor-Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India," Land Economics, University of Wisconsin Press, vol. 94(2), pages 239-258.
    10. Omotilewa, Oluwatoba J. & Jayne, T.S. & Muyanga, Milu & Aromolaran, Adebayo B. & Liverpool-Tasie, Lenis Saweda O. & Awokuse, Titus, 2021. "A revisit of farm size and productivity: Empirical evidence from a wide range of farm sizes in Nigeria," World Development, Elsevier, vol. 146(C).
    11. Holden, Stein T. & Ali, Daniel & Deininger, Klaus & Hilhorst, Thea, 2016. "A Land Tenure Module for LSMS," CLTS Working Papers 1/16, Norwegian University of Life Sciences, Centre for Land Tenure Studies, revised 16 Oct 2019.
    12. Mensah, Edouard R. & Kostandini, Genti, 2020. "The inverse farm size-productivity relationship under land size mis-measurement and in the presence of weather and price risks: Panel data evidence from Uganda," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304477, Agricultural and Applied Economics Association.
    13. Helfand, Steven M. & Taylor, Matthew P.H., 2021. "The inverse relationship between farm size and productivity: Refocusing the debate," Food Policy, Elsevier, vol. 99(C).
    14. Mengistu Assefa Wendimu & Arne Henningsen & Tomasz Gerard Czekaj, 2017. "Incentives and moral hazard: plot level productivity of factory-operated and outgrower-operated sugarcane production in Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 48(5), pages 549-560, September.
    15. Klaus Deininger & Songqing Jin & Yanyan Liu & Sudhir K Singh, 2016. "Can Labor Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India," Working Papers id:10987, eSocialSciences.
    16. Rada, Nicholas & Wang, Chenggang & Qin, Lijian, 2015. "Subsidy or market reform? Rethinking China’s farm consolidation strategy," Food Policy, Elsevier, vol. 57(C), pages 93-103.
    17. Ayala Wineman & Thomas S. Jayne, 2021. "Factor Market Activity and the Inverse Farm Size-Productivity Relationship in Tanzania," Journal of Development Studies, Taylor & Francis Journals, vol. 57(3), pages 443-464, March.
    18. Luo, Yufeng & Chen, Feifei & Qiu, Huanguang, 2018. "Plot size and maize production efficiency in China: agricultural involution and mechanization," 2018 Annual Meeting, August 5-7, Washington, D.C. 274364, Agricultural and Applied Economics Association.
    19. IFPRI International Food Policy Research Institute, 2016. "Can Labour Market Imperfections Explain Changes in the Inverse Farm Size-Productivity Relationship?: Longitudinal Evidence from Rural India," Working Papers id:11007, eSocialSciences.
    20. Kilic, Talip & Zezza, Alberto & Carletto, Calogero & Savastano, Sara, 2017. "Missing(ness) in Action: Selectivity Bias in GPS-Based Land Area Measurements," World Development, Elsevier, vol. 92(C), pages 143-157.

    More about this item

    Keywords

    Wetlands; Labor Policies; Banks&Banking Reform; Climate Change and Agriculture; Agricultural Knowledge and Information Systems;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:wbk:wbrwps:6770. 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: Roula I. Yazigi (email available below). General contact details of provider: https://edirc.repec.org/data/dvewbus.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.