Resource information
With farms cultivating tens or hundreds
of thousands of hectares, Ukraine is often used to
demonstrate the existence of economies of scale in modern
grain production. Panel data analysis for all the
country's farms with more than 200 hectares 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 with more than 3,000 or 5,000 hectares at the rayon
level significantly reduce subsequent exit, suggesting that
land concentration reduces productivity growth. The paper
draws implications for global evolution of farm structures.
