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The effect of land fragmentation on risk and technical efficiency of crop farms

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  • Eder, Andreas

Abstract

Using a 2007-2014 panel of Austrian crop farms, we analyze the effect of multiple dimensions of land fragmentation on farms' production efficiency and risk performance. We use Data Envelopment Analysis (DEA), a non-parametric linear programming approach, to estimate efficiencies. Technical efficiency is decomposed into i) scale efficiency, ii) pure technical efficiency, and iii) input-mix efficiency. Risk efficiency, a concept borrowed from modern portfolio theory, measures the performance of a farm relative to a mean-variance frontier. A second-stage DEA analysis reveals that farms with fewer plots and a shorter average farmstead to plot distance tend to be more technically efficient. Larger plots allow for better exploitation of returns to scale. The scattering of plots has no statistically significant effect on technical efficiency but provides benefits in terms of higher risk efficiency. Land consolidation projects should carefully weigh the costs and benefits associated with different dimensions of land fragmentation.

Suggested Citation

  • Eder, Andreas, 2024. "The effect of land fragmentation on risk and technical efficiency of crop farms," FORLand Working Papers 31 (2024), Humboldt University Berlin, DFG Research Unit 2569 FORLand "Agricultural Land Markets – Efficiency and Regulation".
    • Handle: RePEc:zbw:forlwp:304301
    DOI: 10.18452/29095
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    References listed on IDEAS

    as
    1. Niskanen, Olli & Heikkilä, Anna-Maija, 2015. "The Impact of Parcel Structure on the Efficiency of Finnish Dairy Farms," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(1), pages 1-13, April.
    2. Nguyen, Tin & Cheng, Enjiang & Findlay, Christopher, 1996. "Land fragmentation and farm productivity in China in the 1990s," China Economic Review, Elsevier, vol. 7(2), pages 169-180.
    3. Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
    4. Tone, Kaoru, 2001. "A slacks-based measure of efficiency in data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 130(3), pages 498-509, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Land consolidation; Farmland fragmentation; Economies of scale; Agriculturalproductivity; Risk management; Data Envelopment Analysis;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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