Is There a Farm-Size Productivity Relationship in African Agriculture? Evidence from Rwanda

Whether the negative relationship between farm size and productivity that is confirmed in a large global literature holds in Africa is of considerable policy relevance. This paper revisits this issue and examines potential causes of the inverse productivity relationship in Rwanda, where policy makers consider land fragmentation and small farm sizes to be key bottlenecks for the growth of the agricultural sector. Nationwide plot-level data from Rwanda point toward a constant returns to scale crop production function and a strong negative relationship between farm size and output per hectare as well as intensity of labor use that is robust across specifications. The inverse relationship continues to hold if profits with family labor valued at shadow wages are used, but disappears if family labor is rather valued at village-level market wage rates. These findings imply that, in Rwanda, labor market imperfections, rather than other unobserved factors, seem to be a key reason for the inverse farm-size productivity relationship.

Bibliographic Details

Main Authors:	Ali, Daniel Ayalew, Deininger, Klaus
Language:	English en_US
Published:	World Bank, Washington, DC 2014-02
Subjects:	ADVERSE EFFECTS, AGRICULTURAL DEVELOPMENT, AGRICULTURAL ECONOMICS, AGRICULTURAL GROWTH, AGRICULTURAL LAND, AGRICULTURAL PLOTS, AGRICULTURAL PRACTICE, AGRICULTURAL PRODUCTION, AGRICULTURAL SECTOR, AGRICULTURE, CHEMICAL FERTILIZER, CLASSIFICATION, CLIMATE, CLIMATE CHANGE, CLIMATIC CONDITIONS, COMPETITIVE LABOR MARKETS, CONSERVATION, CONSOLIDATION, CROP, CROP CHOICE, CROP MIX, CROP OUTPUT, CROP PRODUCTION, CROP TYPE, CROPS, DATA COLLECTION, DEVELOPMENT ECONOMICS, DEVELOPMENT STRATEGIES, ECONOMETRIC EVIDENCE, ECONOMICS, EMPLOYMENT, EMPLOYMENT OPPORTUNITIES, EROSION, EXTENSION, FACTOR MARKETS, FAMILY LABOR, FARM, FARM EMPLOYMENT, FARM FAMILY, FARM HOUSEHOLD, FARM MANAGEMENT, FARM SIZE, FARMERS, FARMING, FARMS, FERTILIZER, FERTILIZER USE, FINANCIAL MARKETS, FIXED COSTS, FLOODING, GENDER, GROSS PROFIT, GROSS REVENUE, INCOME, INNOVATIONS, INSURANCE, INTEGRATION, LABOR DEMAND, LABOR MARKET, LABOR MARKETS, LABOUR, LABOUR SUPPLY, LAND REFORM, LAND RESOURCES, LAND USE, LAND VALUE, LAND YIELDS, MARKET WAGE, MARKET WAGES, NATURAL RESOURCES, NET PROFIT, OUTPUTS, PERFECT MARKETS, PESTICIDE USE, PESTS, PH, PLANTATION, PLOTS, POLITICAL ECONOMY, PRODUCTION PROCESS, PRODUCTIVITY, PROFITABILITY, PROPERTY RIGHTS, PUBLIC SERVICES, R&D, RANGES, RESOURCE ALLOCATION, RICE, RURAL DEVELOPMENT, RURAL LABOR, SAND, SKILLED LABOR, SOIL CONSERVATION, SOILS, TOPOGRAPHY, TRANSACTION COSTS, WAGE RATES, WAGES, WETLAND, WORKING CAPITAL,
Online Access:	http://documents.worldbank.org/curated/en/2014/02/18910978/farm-size-productivity-relationship-african-griculture-evidence-rwanda https://hdl.handle.net/10986/17304
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