What Does Initial Farm Size Imply About Growth and Diversification?

Abstract

Recent consolidation in agriculture has shifted production toward fewer but larger farms, reshaping business relationships between farmers, processors, input suppliers, and local communities. We analyze growth and diversification of U.S. corn, wheat, apple, and beef farms by examining longitudinal changes in 10 size cohorts through three successive censuses. We fail to reject Gibrat's law in apple and wheat industries and the mean reversion hypothesis in beef and corn industries. Apple and wheat farms diversify over time. The findings suggest that scale economies diminish for large farms across all four industries and scope economies dominate scale economies for large apple and wheat farms.

Does Human Capital Play an Important Role in Farm Size Growth? The Case of Slovenia

“…This suggests that large farms are growing less than small ones, confirming earlier results for Slovenian agriculture (Bakucs et al, 2013). The policy insight is that different initial farm sizes are an important variable in farm size growth and diversification (Melhim et al, 2009). In the short term, this may be connected to an increase in economies of size, while in the long term it may be associated with a combination of both scope economies for smaller and mixed farms, and scale economies for larger and more specialized farms (in terms of land use).…”

Land Accumulation Dynamics in Developing Country Agriculture

“…The theory has received considerable empirical attention in the context of developed country agriculture. For example, Jarrett (1968), Shapiro et al (1987), Weiss (1999), and Melhim et al (2009a) rejected Gibrat's hypothesis for the cases of Australia, Canada, Austria, and the United States, respectively, whereas Clark et al (1992) and Fulton et al (1995) found support for the theory using data from Canada, and Melhim et al (2009b) found similar support for the United States. Conversely, the only empirical analysis to date set within the context of developing country agriculture is Shergill (1991) who found support for…”

Land Accumulation Dynamics in Developing Country Agriculture

“…The theory has received considerable empirical attention in the context of developed country agriculture. For example, Jarrett (1968), Shapiro et al (1987), Weiss (1999), and Melhim et al (2009a) rejected Gibrat's hypothesis for the cases of Australia, Canada, Austria, and the United States, respectively, whereas Clark et al (1992) and Fulton et al (1995) found support for the theory using data from Canada, and Melhim et al (2009b) found similar support for the United States. Conversely, the only empirical analysis to date set within the context of developing country agriculture is Shergill (1991) who found support for Gibrat's Law for the case of India.…”