Wednesday, February 25, 2009

Farm Size versus Output in the United States, 1992
Median Farm Size Category
Average Gross Output
Average Net Output


Table from, Policy Brief No.4, page 6 in the .pdf

Since I briefly mentioned it a couple of weeks ago, I've been trying to get a handle on the inverse relationship between farm size and output. The effect has been observed in all regions of the world, and is consistent across all farm sizes (page 8, in the .pdf).*

Looking through the 2007 US Agriculture Census, I found that the effect still exists, though the difference in output seems to be smaller than in the table above (perhaps due to a difference in methodology?).

Data from Table 58. Summary by Size of Farm: 2007 (.pdf)

According to the Food First policy brief, the high productivity on small farms in the developing world is due to:
  1. Multiple cropping
  2. Land use intensity
  3. Output composition
  4. Irrigation
  5. Labor quality
  6. Labor intensity
  7. Input use
  8. Resource use
(for detailed explanation of each, see page 7 in the .pdf)

On the other hand, larger farms are typically cultivated as monocultures, usually yield a single crop per year, use heavy machinery and significant chemical inputs, and produce low value commodities. The environmental costs of large mechanized agriculture is a different issue altogether!

Since in the developing world the vast majority of farms are small, and the availability of farm labor is high, it makes sense to improve the efficiency and profitability of these farms by switching gradually to natural farming methods which are even more profitable due to
  • near zero input costs
  • low labor requirement
  • a diversity of high value (and organic) crops
The conservation and enrichment of local resources is of course an excellent added bonus. These will also make the ecosystems more resilient in the face of a fluctuating climate in the next few decades.

* Browsing through current academic literature, I got the impression that among economists, this effect is viewed as somewhat of an artifact; i.e. economics research papers tend to explain the effect on the basis of inequalities (in labor etc.) between small and large farms, rather than as a real farm productivity difference. I have tried to get some clarification from professional economists, but haven't heard anything yet. If you have any opinions one way or another, please let me know.



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