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Productivity and farm size in Australian agriculture: reinvestigating the returns to scale

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  • Sheng, Yu
  • Zhao, Shiji
  • Nossal, Katarina

Abstract

Higher productivity among large farms is often assumed to be a result of increasing returns to scale. However, using farm-level data for the Australian broadacre industry, it was found that constant or mildly decreasing returns to scale is more typical. On examining the monotonic change in marginal input returns as farm operating size increases, it was found that large farms achieve higher productivity through changes in production technology rather than through changes in scale. The results highlight the disparity between ‘returns to scale’ and ‘returns to size’ in Australian agriculture. They also suggest that improving productivity in smaller farms would depend more on their ability to access advanced technologies than their ability to simply expand. The implications for ongoing structural adjustment in Australian agriculture are discussed.

Suggested Citation

  • Sheng, Yu & Zhao, Shiji & Nossal, Katarina, 2011. "Productivity and farm size in Australian agriculture: reinvestigating the returns to scale," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100711, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare11:100711
    DOI: 10.22004/ag.econ.100711
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    Cited by:

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    9. Tim Lefroy & James Key, 2018. "Determinants of Broadacre Farming Efficiency in Western Australia: A Stochastic Frontier Analysis," Economic Papers, The Economic Society of Australia, vol. 37(2), pages 180-196, June.
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    11. Xingguang Li & Xuexi Huo, 2022. "Agricultural labor markets and the inverse plot size–productivity relationship: Evidence from China's apple growers," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2163-2183, November.
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    14. Sheng, Yu & Chancellor, Will, 2019. "Exploring the relationship between farm size and productivity: Evidence from the Australian grains industry," Food Policy, Elsevier, vol. 84(C), pages 196-204.
    15. Ghahramani, Afshin & Bowran, David, 2018. "Transformative and systemic climate change adaptations in mixed crop-livestock farming systems," Agricultural Systems, Elsevier, vol. 164(C), pages 236-251.
    16. Takeshima, Hiroyuki, 2015. "Drivers of growth in agricultural returns to scale: The hiring in of tractor services in the Terai of Nepal:," IFPRI discussion papers 1476, International Food Policy Research Institute (IFPRI).
    17. Zheng, Yanan & Goddard, Ellen W. & Qiu, Feng, 2018. "Exploring the Effect of Disease Outbreaks on Farm Structure Change: A Dynamic Analysis for Canadian Pig Industry," 2018 Annual Meeting, August 5-7, Washington, D.C. 273801, Agricultural and Applied Economics Association.
    18. Arash Dourandish & Sayed Saghaian & Naser Shahnoushi Forushani & Nazanin Mohammadrezazadeh & Sina Kuhestani, 2020. "The Relation Between Property Rights, Farm Size and Technical Efficiency for the Developing Countries' Agricultural Sector," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(5), pages 749-762, July.
    19. Ashok Mishra & Kamel Louhichi & Giampiero Genovese & Sergio Gomez y Paloma, 2023. "Insights into land size and productivity in Ethiopia: What do data and heterogenous analysis reveal? [Aperçu de la relation taille des exploitations et productivité en Éthiopie : que révèlent les d," Post-Print hal-03965902, HAL.
    20. Harris, Patrick, 2020. "Causal Factors of Australian Beef Exports," MPRA Paper 98766, University Library of Munich, Germany.
    21. Bhanupong Nidhiprabha, 2019. "Commodity Price Cycles, the Agricultural Trap, and Thailand's Incessant Subsidies," Asian Economic Papers, MIT Press, vol. 18(2), pages 49-69, Summer.
    22. MCarmen Martínez†Victoria & Mariluz Maté Sánchez†Val & Narciso Arcas†Lario, 2018. "Spatial determinants of productivity growth on agri†food Spanish firms: a comparison between cooperatives and investor†owned firms," Agricultural Economics, International Association of Agricultural Economists, vol. 49(2), pages 213-223, March.
    23. Yu Sheng & Eldon Ball & Katerina Nossal, 2015. "Comparing Agricultural Total Factor Productivity between Australia, Canada, and the United States, 1961-2006," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 38-59, Fall.
    24. Chen, Huang, 2017. "Agricultural Risk, Insurance, and the Land-productivity Inverse Relationship," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258212, Agricultural and Applied Economics Association.

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