Inverse Productivity or Inverse Efficiency? Evidence from Mexico

Abstract

Using a unique panel data set from rural Mexico, we find strong evidence of a negative relationship between farm size and both productivity and technical efficiency: large farms not only have a lower value of output per hectare than small farms, they also produce further from the efficiency frontier. Our findings suggest that, in spite of the ongoing transformation of agricultural supply chains and economists' recommendations for small farmers to exit crop production, there may be sustained advantages for smallholder farms. Our analysis offers new insights into inverse-farm size relationship, the productivity-efficiency relationship, and the use of stochastic frontier techniques.

Can Labor-Market Imperfections Explain Changes in the Inverse Farm Size–Productivity Relationship? Longitudinal Evidence from Rural India

“…Use of profits rather than output per hectare in India has the same result-namely, the relation weakens but does not disappear (Rosenzweig and Binswanger 1993). In Mexico, large farms have a lower value of output per hectare than small farms and produce further from the efficiency frontier (Kagin, Taylor, and Yúnez-Naude 2016).…”

Too small to be beautiful? The farm size and productivity relationship in Bangladesh

“…The results from these studies on the inverse relationship remain mixed, but the approaches used have been criticized on methodological grounds (see O'Donnell, 2014, on a critique of DEA, and Wang and Schmidt, 2002, on the problems with the two-step estimation). There is only one study, to our knowledge, that simultaneously estimates the relationship of farm size with both productivity and technical efficiency (Kagin et al, 2016). 7…”

Extensión de los predios agrícolas y productividad. El caso del campo cañero en México

“…Por tratarse del agro mexicano, el segundo estudio estrechamente relacionado al nuestro es el de Kagin et al (2012), quienes explotan un panel de datos a nivel de parcelas obtenidos de la Encuesta Nacional de Hogares Rurales de México. Tanto el trabajo de Kagin et al como el nuestro aportan a una literatura prácticamente inexistente sobre la relación entre la extensión de las parcelas y sus rendimientos en el contexto del campo mexicano (lo cual, a su vez, ha ocurrido por la carencia de datos para llevar a cabo este tipo de estudios).…”