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The relationship between farm size and efficiency in South African agriculture

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  • van Zyl, Johan
  • Binswanger, Hans
  • Thirtle, Colin

Abstract

Drawing on international evidence, the authors discuss the sources of economies of scale. Using representative farm-level survey data for South Africa's six major grain producing areas and one irrigation area for the period 1975-90, they: describe the the structure of South African agriculture, detailing the distribution of farm sizes and results from previous studies of farm-size efficiency. They also analyze the evidence on scale efficiency in the former homelands and analyze the relationship between farm size and efficiency in commercial farming and discuss how policy affects that relationship. Clearly policy has a crucial impact on the relationship between farm size and efficiency. The authors find that: a) farms in the former homelands seem to be scale-inefficient, which is unsurprising, given the historical lack of access to support services and infrastructure, policies that discriminate against farmers in the homelands, and the extremely fragmented and limited land-use rights of farmers there; b) there is an inverse relationship between farm size and efficiency in the commercial farming areas for the range of farms analyzed, regardless what method is used. This inverse relationship seems to become stronger and accentuated as policy distortions - which tend to favor large farms over small ones - are removed; and c) large farms tend to use more capital intensive methods of production, while smaller farms are more labor-intensive. And managerial ability seems to be better on larger farms. There is an inverse relationship between farm size and efficiency in South African agriculture despite South Africa's history of policies favoring relatively large mechanized farms. Clearly, efficiency gains could be significant if commercial farms became smaller. To encourage that trend, policies and distortions that favor large farms over small should be removed.

Suggested Citation

  • van Zyl, Johan & Binswanger, Hans & Thirtle, Colin, 1995. "The relationship between farm size and efficiency in South African agriculture," Policy Research Working Paper Series 1548, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1548
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rogier van den Brink & Glen Thomas & Hans Binswanger & John Bruce & Frank Byamugisha, 2005. "Consensus, Confusion, and Controversy : Selected Land Reform Issues in Sub-Saharan Africa," World Bank Publications, The World Bank, number 7387, September.
    2. Charles Machethe & Thomas Reardon & Donald Mead, 1997. "Promoting farm/non-farm linkages for employment of the poor in South Africa: A research agenda focused on small-scale farms and agroindustry," Development Southern Africa, Taylor & Francis Journals, vol. 14(3), pages 377-394.
    3. Paul Mosley, 2002. "The African green revolution as a pro-poor policy instrument," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(6), pages 695-724.
    4. Gelan, Ayele & Muriithi, Beatrice W., 2015. "Examining Returns to Scale in Smallholder Dairy Farms in East Africa," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 0(Number 3), pages 1-23, September.
    5. Larson,Donald F. & Muraoka,Rie & Otsuka,Keijiro, 2016. "On the central role of small farms in African rural development strategies," Policy Research Working Paper Series 7710, The World Bank.
    6. Bossio, Deborah & Geheb, Kim & Critchley, William, 2010. "Managing water by managing land: Addressing land degradation to improve water productivity and rural livelihoods," Agricultural Water Management, Elsevier, vol. 97(4), pages 536-542, April.
    7. Ayal Kimhi, 2006. "Plot size and maize productivity in Zambia: is there an inverse relationship?," Agricultural Economics, International Association of Agricultural Economists, vol. 35(1), pages 1-9, July.
    8. Byiringiro, Fidele & Reardon, Thomas, 1996. "Farm productivity in Rwanda: effects of farm size, erosion, and soil conservation investments," Agricultural Economics, Blackwell, vol. 15(2), pages 127-136, November.
    9. Collier, Paul & Dercon, Stefan, 2014. "African Agriculture in 50Years: Smallholders in a Rapidly Changing World?," World Development, Elsevier, vol. 63(C), pages 92-101.
    10. Heltberg, Rasmus, 1998. "Rural market imperfections and the farm size-- productivity relationship: Evidence from Pakistan," World Development, Elsevier, vol. 26(10), pages 1807-1826, October.
    11. Massuanganhe, Israel Jacob, 2008. "Policies, Natural Resource Governance and Local Development," Ph.D Degree Theses 53061, University of the Free State, Department of Agricultural Economics.

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