More than 15 years ago I was pursuing a research interest in 'economies of
size' in farming. At that time, one of the most widely cited references was
a fine study done by J. Patrick Madden in the 1960's. Its interesting to
note that Patrick is one of the fathers of the sustainable agriculture
In the mid-1980's, Thomas A. Miller did a survey of works having been done
on that topic. At that time, most 'evidence' for economies of size in
production came from simulation models. These are always suspect because
the conclusions are easily built into the assumptions of the simulation. No
strong statistical evidence of economies of size much past what a family
farm can run was available at that time.
An easily accessable and good treatment of that topic is found in David
Seckler and Robert Young's 1978 article on the 160 acre rule. It is in the
1978 volume of the American Joural of Agricultural Economics.
The arguement that there are very significant economies of scale seems to be
a bias endemic to agriculturalists--and ag economists are among these.
Its quite possible that the real economies of scale are in marketing, and to
that end, confinement feeding of all sorts of livestock seem to be moving
toward concentration (much production in the hands of a few producers).
Speculations as to why very large feeding facilities are appearing now:
prophylactic use of anti-biotics; specialization of farms into either
livestock feeding or cropping; economies of size in slaughter/packing
facilities combined with costs of transporting finished animals from feedlot
to packing facility.
There has been speculation that organic agriculture would be more management
intensive. If that were so, it is arguably (at least I would are this way)
the case that organic agriculture is even more resistant to economies of
size. In practice, most efficient size will depend heavily upon the types of
Good luck on your research.
Dept of Ag and Resource Econ
B-311 Clark Blg
Colorado State University
Ft Collins, CO 80523