Are Mega-Farms the Future of Global Agriculture? Exploring the Farm Size-Productivity Relationship

37 Pages Posted: 20 Apr 2016

See all articles by Klaus Deininger

Klaus Deininger

World Bank - Development Economics Group (DEC); World Bank - Development Research Group (DECRG)

Denys Nizalov

Kyiv School of Economics; Kyiv School of Economics - Kyiv Economics Institute (KEI); EERC

Sudhir Singh

World Bank

Date Written: July 1, 2013

Abstract

With farms cultivating tens or hundreds of thousands of hectares, Ukraine is often used to demonstrate the existence of economies of scale in modern grain production. Panel data analysis for all the country's farms with more than 200 hectares in 2001-2011 suggests that higher yields and profits are due to unobserved factors at rayon (district) and farm level rather than economies of scale. Productivity growth was driven not by farm expansion but by exit of unproductive and entry of more efficient farms. Higher initial shares of area under farms with more than 3,000 or 5,000 hectares at the rayon level significantly reduce subsequent exit, suggesting that land concentration reduces productivity growth. The paper draws implications for global evolution of farm structures.

Keywords: Economic Theory & Research, Rural Development Knowledge & Information Systems, Crops and Crop Management Systems, Political Economy, Labor Policies

Suggested Citation

Deininger, Klaus and Nizalov, Denys and Singh, Sudhir, Are Mega-Farms the Future of Global Agriculture? Exploring the Farm Size-Productivity Relationship (July 1, 2013). World Bank Policy Research Working Paper No. 6544, Available at SSRN: https://ssrn.com/abstract=2298482

Klaus Deininger (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/kdeininger

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
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Washington, DC 20433
United States

Denys Nizalov

Kyiv School of Economics ( email )

vul. Yakira, 13, 3d floor, suite 334
Kyiv, 04119
Ukraine

HOME PAGE: http://www.kse.org.ua

Kyiv School of Economics - Kyiv Economics Institute (KEI) ( email )

Kyiv, 04119
Ukraine

HOME PAGE: http://www.kei.org.ua

EERC ( email )

4016 Linnean Ave NW
Washington, DC 20008
United States

Sudhir Singh

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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