Evaluation of the Scale Effect in Agriculture of the Amur Region

Abstract

The relationship between size of farms and their productivity creates continuing debates in the economic literature, devoted to problems of development. For example, what type of agricultural enterprises are more efficient - small family farms or large agricultural enterprises that use a corporate model of doing business; or firms that operate large or small plots of land? This article attempts to answer the question about the relationship between performance and size of the firm in the agriculture of the Amur region. The results of the production function evaluation based on microeconomic panel data of agricultural enterprises of the Amur region for the period 2002-2014 indicate decreasing returns to scale of production. The resulting estimation of model (using as explanatory variable the area of agricultural land and arable land) reveals decreasing returns to scale which in turn indicate that the average size of agricultural enterprises is close to optimal only for those businesses for which the land area is a key parameter for economic results

Keywords

• the returns to scale
• agricultural business
• agricultural economics
• regions of Russia
• Amur region