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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.

Suggested Citation

  • Thapa, Sridhar, 2007. "The relationship between farm size and productivity: empirical evidence from the Nepalese mid-hills," MPRA Paper 7638, University Library of Munich, Germany, revised Apr 2007.
  • Handle: RePEc:pra:mprapa:7638
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    File URL: https://mpra.ub.uni-muenchen.de/7638/1/MPRA_paper_7638.pdf
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    References listed on IDEAS

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    1. 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, January.
    2. 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 307-315, April.
    3. Abdulai, Awudu & Regmi, Punya Prasad, 2000. "Estimating labor supply of farm households under nonseparability: empirical evidence from Nepal," Agricultural Economics, Blackwell, vol. 22(3), pages 309-320, April.
    4. 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, vol. 81(6), pages 1370-1386, Nov.-Dec..
    5. 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.
    6. 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 131-145, March.
    7. 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, vol. 18(2-3), pages 297-313, August.
    8. Barrett, Christopher B., 1996. "On price risk and the inverse farm size-productivity relationship," Journal of Development Economics, Elsevier, vol. 51(2), pages 193-215, December.
    9. Cornia, Giovanni Andrea, 1985. "Farm size, land yields and the agricultural production function: An analysis for fifteen developing countries," World Development, Elsevier, vol. 13(4), pages 513-534, April.
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    Cited by:

    1. Francisco Campos-Ortiz & Mariana Oviedo-Pacheco, 2013. "Study on the Competitiveness of the Mexican Sugar Industry," Working Papers 2013-16, Banco de México.
    2. Tleubayev, Alisher & Bobojonov, Ihtiyor & Götz, Linde & Hockmann, Heinrich & Glauben, Thomas, 2017. "Determinants of productivity and efficiency of wheat production in Kazakhstan: A stochastic frontier approach
      [Determinanten von Produktivität und Effizienz der Weizenproduktion in Kasachstan: Ein
      ," IAMO Discussion Papers 160, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    3. Bhatt, Mohammad Sultan & Bhat, Showkat Ahmad, 4. "Technical Efficiency and Farm Size Productivity ― Micro Level Evidence from Jammu & Kashmir," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(4).
    4. Thapa, Sridhar, 2008. "Gender differentials in agricultural productivity: evidence from Nepalese household data," MPRA Paper 13722, University Library of Munich, Germany, revised Feb 2009.
    5. Benjamin Tetteh Anang, 2017. "Effect of non-farm work on agricultural productivity: Empirical evidence from northern Ghana," WIDER Working Paper Series 038, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

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

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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