scholarly journals Will Transaction Costs and Economies of Scale Tip the Balance in Farm Size in Industrial Agriculture? An Illustration for Non-Food Biomass Production in Germany

2021 ◽  
Vol 13 (2) ◽  
pp. 733
Author(s):  
Lanjiao Wen ◽  
Lioudmila Chatalova
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Biomass Production ◽  
Economies Of Scale ◽  
Agricultural Sector ◽  
Returns To Scale ◽  
Cost Savings ◽  
Farm Size ◽  
Agricultural Producers ◽  
Production Scale

The study investigates how the agricultural sector can respond to a growing non-food biomass demand. Taking Germany as an example, a stylized case of biomass production under conditions of technological advance and constantly growing demand is modelled. It is argued that biomass producers might seek to adjust their farm size by simultaneously optimizing benefits from the production scale and transaction cost savings, where transaction costs are measured using Data Envelopment Analysis. The results extend the debate on transaction costs and structural change in agriculture by revealing a possible synergy and trade-off between transaction cost savings and benefits from (dis)economies of scale. They show that if larger farms cannot economize on transaction costs, then investments in land and labor, needed to adjust to higher biomass demand, partly compromise the returns to scale, which decelerates the farm size growth. A higher degree of asset specificity gives rise to transaction costs and reduces the rate at which the farm size decreases. Smaller producers may disproportionally benefit from their higher potential of transaction cost savings, if advanced technologies can offset the scale advantage of larger farms. The findings inform policymakers to consider this complex effect when comparing the opportunities of smaller and larger agricultural producers in the bioeconomy.

The changing role of agriculture in Dutch society

2009 ◽  
Vol 147 (5) ◽  
pp. 511-521 ◽  
Author(s):  
B. G. MEERBURG ◽  
H. KOREVAAR ◽  
D. K. HAUBENHOFER ◽  
M. BLOM-ZANDSTRA ◽  
H. VAN KEULEN
Keyword(s):  
Economies Of Scale ◽  
Agricultural Sector ◽  
Agricultural Research ◽  
Farming Systems ◽  
Farm Size ◽  
Past Century ◽  
The European Union ◽  
Dutch Society ◽  
The Past ◽  
Alternative Farming

SUMMARYDutch agriculture has undergone significant changes in the past century, similar to many countries in the European Union. Due to economies of scale and in order to remain economically profitable, it became necessary for farmers to increase farm size, efficiency and external inputs, while minimizing labour use per hectare. The latter has resulted in fewer people working in the agricultural sector. Consequently, Dutch society gradually lost its connection to agricultural production. This divergence resulted in a poor image for the agricultural sector, because of environmental pollution, homogenization of the landscape, outbreaks of contagious animal diseases and reduced animal welfare. Although the general attitude towards agriculture seems to have improved slightly in recent years, there is still a long way to go in regaining this trust.In order to keep the Dutch countryside viable, farmers are considered indispensable. However, their methods of production should match the demands of society in terms of sustainability. This applies both to farming systems that are used in a monofunctional way (production only) and to multifunctional farming systems. For researchers involved in development of these farming systems, this requires new capabilities; contrary to the situation in the past, citizens and stakeholder groups now demand involvement in the design of farming systems. In the current paper, it is suggested that, besides traditional mainstream agriculture, other alternative farming systems should be developed and implemented. Hence, Dutch agricultural research should remain focused on the cutting edge of economy and society. Despite all efforts, not all of these newly developed systems will acquire a position within the agricultural spectrum. However, some of the successful ones may prove extremely valuable.

scholarly journals Farm Size and Land Use Efficiency in Pakistan's Agriculture

1991 ◽  
Vol 30 (3) ◽  
pp. 263-274
Author(s):  
Waqar A. Jehangir ◽  
Rajan K. Sampath
Keyword(s):  
Land Use ◽  
Economies Of Scale ◽  
Positive Impact ◽  
Returns To Scale ◽  
Farm Size ◽  
Alternative Policy ◽  
Agricultural Income ◽  
Functional Relationships ◽  
The Government ◽  
The One

In this paper we analyzed the relationship between the farm size and economies of scale in the extensive and intensive use of land. We found that the defmition of farm size in terms of linear aggregation of the irrigated and unirrigated lands leads to the misspecification bias, resulting in the under-estimation of the degree of homogeneity of the functions. The implications of the above analysis are fairly obvious. First of all, the one-dimensional defmition of farm size in terms of total land size without distinguishing between the irrigated and the unirrigated lands not only mis-specifies the functional relationships between farm size, on the one hand, and land use and other economic variables, on the other hand; but, more importantly, it also under-estimates the returns to scale value, thereby leading to over-estimation of possible benefits from the re-distribution of land. Secondly, the division of lands into irrigated and unirrigated brings out the importance of irrigation in determining the levels of the extensive and intensive uses of land and goes a long way in explaining the inter-farm size as well as the intra-farm size variations in land use intensities. Thirdly, explicit estimates of the positive impact of irrigation on land use and productivity clearly indicate that there is an alternative policy for radical land reforms to bring about significant changes in the distribution of agricultural income and assets. That alternative policy is to use irrigation development and distribution, which are predominantly under the direct or indirect control of the government, as policy tools to help the small and marginal farmers.

scholarly journals Transaction Costs: Economies of Scale, Optimum, Equilibrium and Efficiency – A Game Theory-Based Model of Transaction Costs

2020 ◽  
Author(s):  
László Kállay ◽  
Tibor Takács ◽  
László Trautmann
Keyword(s):  
Game Theory ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Cost Sharing ◽  
Economies Of Scale ◽  
Direct Costs ◽  
Theory Model ◽  
Sharing Rule ◽  
Player Game ◽  
Principles Of Design

The aim of this article is to propose a core game theory model of transaction costs wherein it is indicated how direct costs determine the probability of loss and subsequent transaction costs. The existence of optimum is proven, and the way in which exposure influences the location of the optimum is demonstrated. The decisions are described as a two-player game and it is discussed how the transaction cost sharing rule determines whether the optimum point of transaction costs is the same as the equilibrium of the game. The dispute between actors regarding changing the share of transaction costs to be paid by each party is modeled by a non-cooperative bargaining game. Requirements of efficient transaction cost sharing rules are defined, and it is posited that solution exists which is not unique. Policy conclusions are also devised based on principles of design of institutions to influence the nature of transaction costs.

scholarly journals THEORY OF CONTRACTS IN THE LIGHT OF NEW INSTITUTIONAL ECONOMICS. THE SPECIFICITY OF AGRICULTURAL CONTRACTS

2018 ◽  
Vol 17 (4) ◽  
pp. 97-104
Author(s):  
Marzena Lemanowicz
Keyword(s):  
Economic Theory ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Institutional Economics ◽  
Agricultural Sector ◽  
Transaction Cost Economics ◽  
New Institutional Economics ◽  
Economic Literature ◽  
Contract Signing

The article reviews Polish and foreign economic literature regarding new institutional economics (NIE) and various research approaches used in the framework of NIE. Particular attention was paid to the economic theory of contracts and the transaction costs, as the limitation of transaction costs is indeed the main stimulus for contract signing. Special attention was given to agricultural contracts and their specificity. The article discusses different theories applied in the analysis of contracts, characterizes contracts according to different criteria, and draws attention to the importance of transaction costs in the theory of contracts. In addition, factors which contribute to these costs have been identified, indicating the necessity of adapting the principles of transaction cost economics to the needs of the agricultural sector.

Economies of Scale and Farm Size in the Antebellum Sugar Sector

1977 ◽  
Vol 37 (4) ◽  
pp. 959-980 ◽  
Author(s):  
Mark D. Schmitz
Keyword(s):  
Economies Of Scale ◽  
Returns To Scale ◽  
Scale Economies ◽  
Increasing Returns ◽  
Farm Size ◽  
Sugar Production ◽  
Steam Power ◽  
Increasing Returns To Scale ◽  
Plantation Economy ◽  
Manufacturing Stage

This article explains the emergence of a plantation economy in the antebellum sugar sector. The hypothesis of increasing returns to scale was tested using a Zellner-Revankar generalized production function model. Economies of scale were found using samples from the manuscript censuses, but these scale economies diminished with size. A second important factor in explaining the size distribution of farms was the dual technology in the manufacturing stage of sugar production. Farms with inferior horse-power mills had poorer survival records and less flexibility in expansion than those using steam power mills.

scholarly journals The Effect of Transaction Costs on The Benefits of Hybrid Maize Farming in Dompu District, West Nusa Tenggara

2021 ◽  
Vol 4 (1) ◽  
pp. 162-172
Author(s):  
Dodo Kurniawan ◽  
Candra Fajri Ananda ◽  
Putu Mahardika Adi S ◽  
Moh. Khusaini
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Agricultural Sector ◽  
Imperfect Markets ◽  
Information Costs ◽  
Hybrid Corn ◽  
Maintenance Cycle ◽  
Implementation Costs ◽  
Hybrid Maize ◽  
Cost Components

The characteristics of imperfect markets are characterized by the presence of transaction costs. One sector that is an imperfect market is the agricultural sector. The purpose of this study was to analyze the structure of transaction costs and the implications of transaction costs on the benefits of hybrid corn farming. The research method uses transaction cost analysis and multiple linear regression. The research was conducted in Dompu Regency, West Nusa Tenggara with 120 respondents as corn farmers. The results show that implementation costs are the component of transaction costs that have the highest percentage of 43.35%, then supervision costs are 28.37%, transportation costs are 20.61%, negotiation costs are 3.70%, information costs are 3.41% and coordination 0.57%. These transaction cost components are distributed in each hybrid corn farming cycle, among others; (1) birth cycle; (2) cropping cycle; (3) maintenance cycle; (4) supervision; (5) harvest cycle; and (6) postharvest cycle. The postharvest cycle is the cycle that has the highest percentage of 23.17%, then the maintenance cycle is 18.53%, the harvest cycle is 17.65%, the cropping cycle is 17.28% and the control cycle is 13.99%. Transaction costs have a positive and significant effect on the profits of hybrid corn farming.

scholarly journals Scale and Scope Economies in Banking: A Case Study of the Agricultural Development Bank of Pakistan

1996 ◽  
Vol 35 (3) ◽  
pp. 203-213 ◽  
Author(s):  
Musleh-Ud Din ◽  
Ejaz Ghani ◽  
Sarfraz Khan Qureshi
Keyword(s):  
Agricultural Development ◽  
Economies Of Scale ◽  
Returns To Scale ◽  
Cost Savings ◽  
Production Costs ◽  
Joint Production ◽  
Economies Of Scope ◽  
Development Bank ◽  
Bank Branches ◽  
Constant Returns To Scale

This paper examines the scale and scope efficiency of the Agricultural Development Bank of Pakistan. Using the production approach to measuring bank outputs and costs, a translog cost function is estimated to provide an assessment of the bank’s scale and scope efficiency, and to quantify the extent to which its production costs are sensitive to size and output mix. Our results show that the bank enjoys both overall and product-specific economies of scale and, therefore, there exists scope for the bank to expand its operations at declining average cost. We show that even though bank branches in all size categories enjoy economies of scale, the extent of such economies is larger for branches operating at a smaller scale of production. This implies that as the bank branches grow larger in size in terms of both loan and deposit accounts, they move closer to attaining constant returns to scale. It is also shown that the marginal costs of servicing both loan and deposit accounts decline as bank branches grow larger in size in terms of either the number of loans or the number of deposits. This confirms that branches operating at a larger scale of production have attained greater cost efficiency in terms of servicing the loan and deposit accounts. As regards economies of scope, our results show that the bank’s production technology is characterised by cost complementarity, which gives rise to cost savings through the joint production of loan and deposit accounts.

From transaction costs to transaction value: Overcoming the frictional paradigm

2020 ◽  
pp. 51-81
Author(s):  
D. P. Frolov
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Path Dependence ◽  
Transaction Cost Economics ◽  
Cost Minimization ◽  
Low Cost ◽  
Coase Theorem ◽  
Transactional Analysis ◽  
Transaction Sector ◽  
Transaction Value

The transaction cost economics has accumulated a mass of dogmatic concepts and assertions that have acquired high stability under the influence of path dependence. These include the dogma about transaction costs as frictions, the dogma about the unproductiveness of transactions as a generator of losses, “Stigler—Coase” theorem and the logic of transaction cost minimization, and also the dogma about the priority of institutions providing low-cost transactions. The listed dogmas underlie the prevailing tradition of transactional analysis the frictional paradigm — which, in turn, is the foundation of neo-institutional theory. Therefore, the community of new institutionalists implicitly blocks attempts of a serious revision of this dogmatics. The purpose of the article is to substantiate a post-institutional (alternative to the dominant neo-institutional discourse) value-oriented perspective for the development of transactional studies based on rethinking and combining forgotten theoretical alternatives. Those are Commons’s theory of transactions, Wallis—North’s theory of transaction sector, theory of transaction benefits (T. Sandler, N. Komesar, T. Eggertsson) and Zajac—Olsen’s theory of transaction value. The article provides arguments and examples in favor of broader explanatory possibilities of value-oriented transactional analysis.

Updating the methodology for providing incentive subsidies to depressed agricultural regions

2020 ◽  
Vol 19 (12) ◽  
pp. 2210-2224
Author(s):  
V.M. Sharapova ◽  
T.N. Medvedeva ◽  
E.A. Farvazova
Keyword(s):  
Russian Federation ◽  
Agricultural Sector ◽  
Methodological Approach ◽  
State Regulation ◽  
The State ◽  
State Support ◽  
Agricultural Producers ◽  
The Russian Federation ◽  
Depressed Regions ◽  
Agricultural Regions

Subject. The article considers a procedure for calculating and distributing State support to depressed agricultural regions in the framework of a new type of budget financing, i.e. compensating and stimulating subsidies. Objectives. The purpose is to evaluate the efficiency of the system of State regulation of agribusiness in a depressed region, determine the priority of modern methods of budgetary support from the State, improve the methodological approach to the distribution of State aid among subjects of the Russian Federation with low level of socio-economic development. Methods. The study draws on the abstract and logical method, methods of statistical analysis, grouping, comparison, and generalization. Results. We realized the objectives of the study, using the agricultural producers of the Kurgan Oblast case. The paper analyzes the condition of agricultural sector in the depressed region, assesses the State support system efficiency for the agricultural sector of the Trans-Ural region, considers government measures related to the regulation of the economy of backward regions. It presents an updated method of budget financing within an incentive subsidy by clarifying the calculations and introducing an additional indicator that reflects the level of remuneration of regional agricultural producers. Conclusions. The updated calculation methodology for incentive subsidies to depressed regions enables to build a certain economic rating of ten depressed regions of the Russian Federation, taking into account not only the volume of production and employment, but also the level of wages of agricultural workers.

Incentives of the State to promote the retrofitting of the agricultural sector: Regional considerations

2020 ◽  
Vol 16 (6) ◽  
pp. 1101-1113
Author(s):  
M.Sh. Gutuev ◽  
B.Sh. Ibragimova
Keyword(s):  
Agricultural Sector ◽  
Animal Husbandry ◽  
Technological Equipment ◽  
Agricultural Producers ◽  
Agricultural Technologies ◽  
Abstract Logic ◽  
Land Cultivation ◽  
Equipment Acquisition ◽  
Acquisition Costs ◽  
The Republic

Subject. The article discusses the availability of technological equipment in the agriculture of the Republic of Dagestan. Objectives. We analyze the current situation and trends in the development of available technological equipment in the republican agriculture, identify the role and place of machine and tractor fleet in the retrofitting of the regional agriculture. Methods. The study is based on monographic, abstract logic, statistical, analytical methods. Results. Dagestan has got a critically few technological equipment, which affects the development of the regional agricultural sector. The availability of technological equipment is found to have dramatically reduced in animal husbandry for the recent 30 years. The availability of technological equipment and land cultivation strongly correlates, thus simplifying applicable agricultural technologies. Most agricultural producers of Dagestan were found to be unable to participate in the program for federal agricultural lease. Conclusions and Relevance. The deterioration of available technological equipment in agriculture is a key cause undermining the competitiveness of products and efficiency of the regional agriculture. We prove the importance of governmental actions incentivizing the influx of new technological equipment, including a set of measures reinforcing the availability of technological equipment. As long as most agricultural producers are microbusinesses that lack resources to participate in many machine renovation programs, funding should be increased substantially to subsidize a portion of equipment acquisition costs incurred by agricultural producers, and a portion of reimbursed costs as much as at least 50 percent of the value of agricultural machines acquired.

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