Modern Value Chains and the Organization of Agrarian Production

Heath Henderson and Alan Isaac

American Journal of Agricultural Economics, 2017, vol. 99, issue 2, 379-400

Abstract: Empirical studies of agrarian production in developing countries often find that small farms possess a productivity advantage over larger farms. Eswaran and Kotwal (1986) famously derive this inverse farm-size/productivity relationship from the structure of agrarian production. The focal prediction of their model is that, in otherwise equivalent economies, a more egalitarian land distribution raises both output and producer welfare. The traditional (spot) procurement system implicit in the Eswaran and Kotwal model, however, diverges fundamentally from modern (contractual) procurement practices. We therefore develop a new model of agrarian production in order to determine whether the introduction of a modern value chain alters the welfare effects of land redistribution. The inverse farm-size/productivity relationship persists in our model, but we find that more egalitarian land distribution leads to nonmonotonic changes in producer welfare. We also find that the introduction of a modern sector can harm the laboring classes.

Keywords: Smallholder agriculture; agricultural value chains; contract farming; land reform (search for similar items in EconPapers)
JEL-codes: C63 D23 O13 Q13 Q15 (search for similar items in EconPapers)
Date: 2017
References: Add references at CitEc
Citations: View citations in EconPapers (18)

Downloads: (external link)
http://hdl.handle.net/10.1093/ajae/aaw092 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:99:y:2017:i:2:p:379-400.

Access Statistics for this article

American Journal of Agricultural Economics is currently edited by Madhu Khanna, Brian E. Roe, James Vercammen and JunJie Wu

More articles in American Journal of Agricultural Economics from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().