Knowledge Note

With farms cultivating tens or hundreds of thousands of hectares, Ukraine’s example is often used to demonstrate the existence of economies of scale in modern grain production. Panel data analysis for all the country’s farms above 200 ha in 2001-2011 suggests that higher yields and profits are due to unobserved factors at rayon (district) and farm level rather than economies of scale. Productivity growth was driven not by farm expansion but by exit of unproductive and entry of more efficient farms. Higher initial shares of area under farms above 5,000 ha at rayon level significantly reduce subsequent exit and entry, suggesting that excessive land concentration reduces productivity growth in the long run. Implications for global evolution of farm structures are drawn out.

About the Presenters

KLAUS DEININGER

DENYS NIZALOV

SUDHIR K. SINGH