Farm Size and Productivity : A "Direct-Inverse-Direct" Relationship
This paper proposes a new interpretation of the farm size-productivity relationship. Using two rounds of the Ethiopian Rural Household Survey, and drawing on earlier work on five countries in Sub-Saharan Africa, the paper shows that the relationshi...
| Main Authors: | , |
|---|---|
| Format: | Working Paper |
| Language: | English English |
| Published: |
World Bank, Washington, DC
2017
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/971111498654799959/Farm-size-and-productivity-a-direct-inverse-direct-relationship http://hdl.handle.net/10986/27630 |
| Summary: | This paper proposes a new interpretation
of the farm size-productivity relationship. Using two rounds
of the Ethiopian Rural Household Survey, and drawing on
earlier work on five countries in Sub-Saharan Africa, the
paper shows that the relationship between farm size and
productivity is neither monotonic nor univocal. Most
previous studies that tested the inverse farm
size-productivity relationship used ordinary least squares
estimation, therefore reporting parameter estimates at the
conditional mean of productivity. By expanding these
important findings to consider the entire distribution of
agricultural productivity, the analysis finds sign switches
across the distribution, pointing to a
“direct-inverse-direct” relationship. Less productive
farmers exhibit an inverted U-shape relationship between
land productivity and farm size, while more productive
farmers show a U-shape relationship that reverses the
relationship. In both cases, the relationship points toward
a threshold value of farm size; however, the threshold is a
minimum for the less productive farmers and a maximum for
the more productive ones. To the left of the threshold, for
very small farmers, the relationship between productivity
and farm size is positive; for the range of middle farm
size, the relationship is negative; and to the right of the
threshold, the relationship is direct (positive) again. From
a policy perspective, these findings imply that
efficiency-enhancing and redistributive land reform should
consider farm size in the proper context of the present and
potential levels of agricultural productivity. The results
and their policy implications underline the relevance of the
most recent efforts of the international development
community to collect more reliable georeferenced data on
farm size and agricultural productivity. |
|---|