The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills

Sridhar Thapa

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the farm size and productivity relationship using data from Nepalese mid hills. The household data used has been drawn from a survey conducted by the author and financed by the Norwegian University of Life Science. The analysis uses models both allowing for and not allowing for village dummies(as cluster controls), the ratio of irrigated land (as proxy for land quality), and other socio-economic variables such as households, belonging to caste groups, and family size (as proxy for access to resources). The result supported the almost ‘stylized fact’ of inverse relationship (IR) between farm size and output per hectare. Total cash input use and labour hours per hectare were found to be higher on small farms. The findings of regression equations allowing for village dummies and other socio-economic variables do not support the explanation that the IR between farm size and productivity is due to variation in regions as well as access to resources. Nevertheless, family size and caste dummies show some effects on farm value added. The paper further investigates returns to scale in Nepalese agriculture, applying the Cobb-Douglas (CD) production function. The result shows constant returns to scale. Labour input seems more influential in farm production, followed by manure, in the sample farms. The overall result shows that the IR between farm size and output per hectare is perhaps due to the result more of other inputs used by small farms rather than diseconomies of scale.

Keywords: inverse relationship; farm size; productivity; returns to scale; Nepal (search for similar items in EconPapers)
JEL-codes: O13 Q15 (search for similar items in EconPapers)
Date: 2007-03, Revised 2007-04
New Economics Papers: this item is included in nep-agr and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills (2007)
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