Next Article in Journal
Entrepreneurial Sustainability Engagement of Insiders Initiating Energy System Transition
Next Article in Special Issue
Housefly Maggot Meal as a Potent Bioresource for Fish Feed to Facilitate Early Gonadal Development in Clarias gariepinus (Burchell,1822)
Previous Article in Journal
Early-Stage Neural Network Hardware Performance Analysis
Previous Article in Special Issue
Understanding Farm-Level Incentives within the Bioeconomy Framework: Prices, Product Quality, Losses, and Bio-Based Alternatives
Open AccessArticle

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

1
Leibniz Institute of Agricultural Development in Transition Economies (IAMO), 06120 Halle, Germany
2
College of Land Management, Huazhong Agricultural University, Wuhan 430070, China
*
Author to whom correspondence should be addressed.
Sustainability 2021, 13(2), 733; https://doi.org/10.3390/su13020733
Received: 30 November 2020 / Revised: 8 January 2021 / Accepted: 10 January 2021 / Published: 13 January 2021
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. View Full-Text
Keywords: agricultural biomass; Data Envelopment Analysis; economies of scale; Germany; optimal farm size; transaction costs agricultural biomass; Data Envelopment Analysis; economies of scale; Germany; optimal farm size; transaction costs
Show Figures

Figure 1

MDPI and ACS Style

Wen, L.; Chatalova, L. 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. Sustainability 2021, 13, 733. https://doi.org/10.3390/su13020733

AMA Style

Wen L, Chatalova L. 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. Sustainability. 2021; 13(2):733. https://doi.org/10.3390/su13020733

Chicago/Turabian Style

Wen, Lanjiao; Chatalova, Lioudmila. 2021. "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" Sustainability 13, no. 2: 733. https://doi.org/10.3390/su13020733

Find Other Styles
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Article Access Map by Country/Region

1
Search more from Scilit
 
Search
Back to TopTop