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Are mega-farms the future of global agriculture : exploring the farm size-productivity relationship for large commercial farms in Ukraine (Ucraniano)

With farms cultivating tens or hundreds of thousands of hectares (HA), 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 to 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. The study shows that the dearth of studies to guide policy-making in Ukraine is not due to absence of data but the lack of capacity to process and link available information. Addressing this gap can help support research on a number of key topics including an exploration of the extent to which smaller farms' growth is hampered by factor market imperfections (and how they can be over-come); land valuation and the extent to which there is an under-investment in long-term agricultural assets; and the links between agricultural and non-agricultural growth at rayon level.

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