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

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Author Info

  • 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.

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File URL: http://purl.umn.edu/100711
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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia with number 100711.

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Date of creation: 2011
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Handle: RePEc:ags:aare11:100711

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Related research

Keywords: returns to scale; returns to size; production function; technology progress; structural adjustment; Australian agriculture; Agricultural and Food Policy;

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  1. Hughes, Neal & Lawson, Kenton & Davidson, Alistair & Jackson, Tom & Sheng, Yu, 2011. "Productivity pathways: climate-adjusted production frontiers for the Australian broadacre cropping industry," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100563, Australian Agricultural and Resource Economics Society.
  2. Boussemart, Jean-Philippe & Briec, Walter & Peypoch, Nicolas & Tavéra, Christophe, 2009. "[alpha]-Returns to scale and multi-output production technologies," European Journal of Operational Research, Elsevier, vol. 197(1), pages 332-339, August.
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Cited by:
  1. Lawes, R.A. & Kingwell, R.S., 2012. "A longitudinal examination of business performance indicators for drought-affected farms," Agricultural Systems, Elsevier, vol. 106(1), pages 94-101.

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