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Are Small Farms Really more Productive than Large Farms?

Fernando Aragon, Diego Restuccia () and Juan Rud

Working Papers from University of Toronto, Department of Economics

Abstract: We revisit the long-standing empirical evidence of an inverse relationship between farm size and productivity using rich microdata from Uganda. We show that farm size is negatively related to yields (output per hectare), as commonly found in the literature, but positively related to farm productivity (a farm-specific component of total factor productivity). These conflicting results do not arise because of omitted variables such as land quality, measurement error in output or inputs, or specification issues. Instead, we reconcile the findings emphasizing the role of farm-specific distortions and returns to scale in traditional farm production. We exploit unique regional variation in land tenure regimes in Uganda in evaluating the role of farm-specific distortions. Our findings point to the limited value of yields (or land productivity) in establishing the farm size-productivity relationship. More generally, we demonstrate the limitation of using farm size in guiding policy applications.

Keywords: Farm size; productivity; yields; land markets; distortions; agriculture; policy; regions; technology. (search for similar items in EconPapers)
JEL-codes: O4 O5 O11 O12 O13 E02 E13 Q15 Q18 C33 C55 D24 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2019-09-24
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Working Paper: Are Small Farms Really more Productive than Large Farms? (2019) Downloads
Working Paper: Are Small Farms Really more Productive than Large Farms? (2019) Downloads
Working Paper: Are small farms really more productive than large farms? (2019) Downloads
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