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Farm size, productivity and returns to scale in agriculture revisited: a case study of wine producers in South Africa

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  • Townsend, R. F.
  • Kirsten, J.
  • Vink, N.

Abstract

The inverse relationship between farm size and productivity has almost become a 'stylised fact' in the economic development literature. Most of the studies contributing to this preception have been flawed by methodological shortcomings and the request is that these studies be treated with caution. Using recent farm survey data from the wine producing areas of the Western Cape of South Africa, this study attempts to overcome some of the methodological problems, distinguishing between partial and total productivity measures. Using data envelopment analysis, most of the wine grape producers were found to operate under constant returns to scale. Co-operative membership seemed to overcome the economies of scale associated with processing and marketing. The inverse relationship between farm size and both land productivity and total factor productivity is weak, not consistently negative and differs between regions. Thus, caution must be used when advocating rural development policies based on the inevitability of an inverse relationship existing in all sectors and production regions of agriculture. © 1998 Elsevier Science B.V. All rights reserved.
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  • Townsend, R. F. & Kirsten, J. & Vink, N., 1998. "Farm size, productivity and returns to scale in agriculture revisited: a case study of wine producers in South Africa," Agricultural Economics, Blackwell, vol. 19(1-2), pages 175-180, September.
  • Handle: RePEc:eee:agecon:v:19:y:1998:i:1-2:p:175-180
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    1. Evenson, Robert E. & Landau, Daniel & Ballou, Dale, 1987. "Agricultural Productivity Measures for U.S. States 1950-82," Evaluating Agricultural Research and Productivity, Proceedings of a Workshop, Atlanta, Georgia, January 29-30, 1987, Miscellaneous Publication 52 50019, University of Minnesota, Agricultural Experiment Station.
    2. Binswanger, Hans P. & Deininger, Klaus & Feder, Gershon, 1995. "Power, distortions, revolt and reform in agricultural land relations," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 42, pages 2659-2772 Elsevier.
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    Cited by:

    1. Gregory E. Frey, & Hugo E. Fassola & A. Nahuel Pachas & Luis Colcombet & Santiago M. Lacorte & Mitch Renkow & Oscar Pérez & Frederick W. Cubbage, 2012. "A Within-Farm Efficiency Comparison of Silvopasture Systems with Conventional Pasture and Forestry in Northeast Argentina," Land Economics, University of Wisconsin Press, vol. 88(4), pages 639-657.
    2. Manevska-Tasevska, Gordana & Hansson, Helena, 2010. "Influence of rural development policy targets on farm efficiency: An efficiency study of labour intensive grape growing family farms," IAMO Forum 2010: Institutions in Transition – Challenges for New Modes of Governance 52696, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    3. Vink, Nick, 2014. "Commercialising agriculture in Africa: economic, social and environmental impacts," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 9(1), February.
    4. Basak, Debasmita & Mukherjee, Arijit, 2016. "Social efficiency of entry in a vertically related industry," Economics Letters, Elsevier, vol. 139(C), pages 8-10.
    5. García-Díaz, César & Moreno-Monroy, Ana I., 2012. "Social influence, agent heterogeneity and the emergence of the urban informal sector," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(4), pages 1563-1574.
    6. Frantisek Brazdik, 2006. "Non-Parametric Analysis of Technical Efficiency: Factors Affecting Efficiency of West Java Rice Farms," CERGE-EI Working Papers wp286, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    7. Aparicio, Juan & Borras, Fernando & Pastor, Jesus T. & Vidal, Fernando, 2013. "Accounting for slacks to measure and decompose revenue efficiency in the Spanish Designation of Origin wines with DEA," European Journal of Operational Research, Elsevier, vol. 231(2), pages 443-451.
    8. Tchale, Hardwick & Sauer, Johannes, 2007. "The efficiency of maize farming in Malawi. A bootstrapped translog frontier," Cahiers d'Economie et de Sociologie Rurales (CESR), INRA (French National Institute for Agricultural Research), vol. 82.
    9. Alvarez, Antonio & Arias, Carlos, 2004. "Technical efficiency and farm size: a conditional analysis," Agricultural Economics, Blackwell, vol. 30(3), pages 241-250, May.
    10. Tchale, Hardwick & Sauer, Johannes, 2008. "Soil Fertility Management And Maize Productivity In Malawi: Curvature Correct Efficiency Modeling And Simulation," 2007 Second International Conference, August 20-22, 2007, Accra, Ghana 52077, African Association of Agricultural Economists (AAAE).
    11. Jara-Rojas, Roberto & Bravo-Ureta, Boris & Solis, Daniel & Martinez, Daniela, 2016. "Production efficiency and commercialization channels among small-scale farmers: Evidence for raspberry production in Central Chile," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229330, Southern Agricultural Economics Association.
    12. Hardwick Tchale & Johannes Sauer, 2007. "The efficiency of maize farming in Malawi. A bootstrapped translog frontier," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 82, pages 33-56.
    13. Lucie Ménager & Christine Valente, 2011. "Market power and voluntary land redistribution," Working Papers hal-00867615, HAL.
    14. Hardwick Tchale & Johannes Sauer, 2007. "The efficiency of maize farming in Malawi. A bootstrapped translog frontier," Post-Print hal-01201145, HAL.
    15. Maurice Ogada & Dianah Muchai & Germano Mwabu & Mary Mathenge, 2014. "Technical efficiency of Kenya’s smallholder food crop farmers: do environmental factors matter?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(5), pages 1065-1076, October.
    16. Matchaya, Greenwell C., 2007. "Does size of operated area matter? Evidence from Malawi's agricultural production," MPRA Paper 11948, University Library of Munich, Germany.
    17. Gustavo Anríquez & Genny Bonomi, 2007. "Long-Term Farming Trends. An Inquiry Using Agricultural Censuses," Working Papers 07-20, Agricultural and Development Economics Division of the Food and Agriculture Organization of the United Nations (FAO - ESA).
    18. Tao Zhang, 2007. "Part-time farming: off-farm and on-farm household efficiency measurement of Ireland farm households," Working Papers 0705, Rural Economy and Development Programme,Teagasc.
    19. Manevska-Tasevska, Gordana, 2011. "Efficiency analysis of commercial grape-producing family farms in the Republic of Macedonia," Department of Economics publications 8496, Swedish University of Agricultural Sciences, Department of Economics.
    20. Igbekele Ajibefun & Adebiyi Daramola & Abiodun Falusi, 2006. "Technical efficiency of small scale farmers: An application of the stochastic frontier production function to rural and urban farmers in Ondo State, Nigeria," International Economic Journal, Taylor & Francis Journals, vol. 20(1), pages 87-107.

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