Larger farms benefit farmers but not consumers

Larger farms benefit farmers but not consumers

March 6, 2020

A study by Frederik Noack, Assistant Professor in the Food and Resource Economics Group in Land and Food Systems, and Ashley Larsen, Assistant Professor, University of California, Santa Barbara, reviews the effect of increasing rural farm size on food security.

Why is this study important?

Reducing global poverty and striving for zero hunger are among the 17 Sustainable Development Goals of the United Nations.

Assistant Professor Frederik Noack from UBC’s Faculty of Land and Food Systems and his research collaborator, Assistant Professor Ashley Larsen from the University of California, Santa Barbara, analyzed the impact between farm size in developing countries on both the livelihood of individual farmers and on the local food supply.

Much of the past research in development economics has focused on providing small-scale farmers with other non-farming sources of income to help alleviate poverty, which can result in larger and more consolidated farms.

Noack and Larsen wanted to find out whether these larger farms could impact access to food for consumers in poor countries, and affect the already-fragile food system.

Small-scale farming has attracted policy and research attention as these farms are the primary source of both food and income for the majority of people living in developing countries. Previous studies show that more than 70% of farms in poor countries are less than two hectares in size and many are managed by families.

What were the results?

From 2009 to 2014, the researchers reviewed annual survey data from 3200 households in Uganda, Africa, that provided insight into annual growing seasons.

Their research titled The contrasting effects of farm size on farm incomes and food production, published in Environmental Research Letters, measures how farm size affects the level and stability of agricultural incomes for individual farmers and the level and stability of the food supply.

Individual farmer incomes and their consumption levels – driven by greater income – improves if they have larger farms. In addition, their incomes also become more stable as the larger farms enable diversification of food production, thus stabilizing their incomes. The benefit to the rural farmer is definitely positive.

In contrast, the benefit to consumers is negative. Output per unit of land declines with increasing farm size.

At the aggregate level, consumers would face lower and more variable food supply. This is due to farmers accessing similar technology, growing more similar crops, and therefore having more similar outcomes than a large number of smaller farms.

If in 2013, the median farm in Uganda had increased from 0.9 to 1.8 hectares, the approximate output per unit of land would have reduced by 50%. For farmers, their farm income would have risen by 5% and their income variance would have been reduced by 8%.

This would be good for the individual farmer, but not for the larger community.

What could be the impact?

Previously, research and government policy looked at farm size and production or at finding ways for farmers to obtain income from non-agricultural sources. The results from this study cautions that policies supporting farm consolidation can have negative consequences for consumers. It may be important to consider other policies, such as the provision of improved technologies or better access to credit markets to support technological adoption to increase both farmers’ incomes and food production simultaneously.

To read The contrasting effects of farm size on farm incomes and food production, click here.