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Land Fragmentation, Market Integration and Farm Efficiency: Empirical Evidence from Kosovo

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  • Sauer, Johannes
  • Davidova, Sophia
  • Gorton, Matthew

Abstract

This paper investigates the effect of land fragmentation on farm efficiency in Kosovo utilising agricultural household survey data. To recognise heterogeneity among agricultural production systems in Kosovo, we estimate the technology separately for different groups or “classes” of farms, identified using latent class modelling. This approach separates the data into multiple technological “classes” according to estimated probabilities of class membership based on multiple specified characteristics, relating in this case to land fragmentation and market integration. The latent class frontier method is linked to the estimation of a multi-output multi-input production function, namely a directional output distance function, and to the estimation of Morishima elasticities of substitution, based on shadow price changes indicating allocative efficiency changes. The analytical results confirm that the usual approach of using one homogenous function to estimate fragmentation effects is misleading and can lead to inappropriate policy recommendations. Three distinct classes of farm households are identified, which show different levels of efficiency and the proxies for land fragmentation and market integration show different signs over these classes.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 123236.

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Date of creation: May 2012
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Handle: RePEc:ags:aaea12:123236

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Keywords: Land fragmentation; market integration; farm households; Kosovo; Agricultural and Food Policy; Production Economics; Productivity Analysis; O13; Q12;

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  1. del Corral, Julio & Alvarez, Antonio & Tauer, Loren W., 2009. "Detecting Technological Heterogeneity in New York Dairy Farms," Working Papers 51143, Cornell University, Department of Applied Economics and Management.
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  15. Jean-Paul Chavas & Ragan Petrie & Michael Roth, 2005. "Farm Household Production Efficiency: Evidence from The Gambia," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(1), pages 160-179.
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