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The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills

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  • Thapa, Sridhar

Abstract

This paper examines the farm size and productivity relationship using data from Nepalese mid hills. The household data used has been drawn from a survey conducted by the author and financed by the Norwegian University of Life Science. The analysis uses models both allowing for and not allowing for village dummies(as cluster controls), the ratio of irrigated land (as proxy for land quality), and other socio-economic variables such as households, belonging to caste groups, and family size (as proxy for access to resources). The result supported the almost ‘stylized fact’ of inverse relationship (IR) between farm size and output per hectare. Total cash input use and labour hours per hectare were found to be higher on small farms. The findings of regression equations allowing for village dummies and other socio-economic variables do not support the explanation that the IR between farm size and productivity is due to variation in regions as well as access to resources. Nevertheless, family size and caste dummies show some effects on farm value added. The paper further investigates returns to scale in Nepalese agriculture, applying the Cobb-Douglas (CD) production function. The result shows constant returns to scale. Labour input seems more influential in farm production, followed by manure, in the sample farms. The overall result shows that the IR between farm size and output per hectare is perhaps due to the result more of other inputs used by small farms rather than diseconomies of scale.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7638.

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Date of creation: Mar 2007
Date of revision: Apr 2007
Handle: RePEc:pra:mprapa:7638

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Keywords: inverse relationship; farm size; productivity; returns to scale; Nepal;

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  1. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, Elsevier, vol. 51(2), pages 193-215, December.
  2. Bhalla, Surjit S & Roy, Prannoy L, 1988. "Mis-specification in Farm Productivity Analysis: The Role of Land Quality," Oxford Economic Papers, Oxford University Press, vol. 40(1), pages 55-73, March.
  3. Abdulai, Awudu & Regmi, Punya Prasad, 2000. "Estimating labor supply of farm households under nonseparability: empirical evidence from Nepal," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 22(3), April.
  4. Shenggen Fan & Connie Chan-Kang, 2005. "Is small beautiful? Farm size, productivity, and poverty in Asian agriculture," Agricultural Economics, International Association of Agricultural Economists, vol. 32(s1), pages 135-146, 01.
  5. Cornia, Giovanni Andrea, 1985. "Farm size, land yields and the agricultural production function: An analysis for fifteen developing countries," World Development, Elsevier, Elsevier, vol. 13(4), pages 513-534, April.
  6. Feder, Gershon, 1985. "The relation between farm size and farm productivity : The role of family labor, supervision and credit constraints," Journal of Development Economics, Elsevier, Elsevier, vol. 18(2-3), pages 297-313, August.
  7. Bardhan, Pranab K, 1973. "Size, Productivity, and Returns to Scale: An Analysis of Farm-Level Data in Indian Agriculture," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 81(6), pages 1370-86, Nov.-Dec..
  8. Newell, Andrew & Pandya, Kiran & Symons, James, 1997. "Farm Size and the Intensity of Land Use in Gujarat," Oxford Economic Papers, Oxford University Press, vol. 49(2), pages 307-15, April.
  9. Carter, Michael R, 1984. "Identification of the Inverse Relationship between Farm Size and Productivity: An Empirical Analysis of Peasant Agricultural Production," Oxford Economic Papers, Oxford University Press, vol. 36(1), pages 131-45, March.
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Cited by:
  1. Thapa, Sridhar, 2008. "Gender differentials in agricultural productivity: evidence from Nepalese household data," MPRA Paper 13722, University Library of Munich, Germany, revised Feb 2009.

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