The concept of economies of scale in a multiproduct industry and its implications for the future of agriculture

The concept of economies of scale is carefully defined, and the confusion which often arises from not making a distinction between economies of scale and advantages in production structure is pointed out. It is suggested that economies of scale play a minor role in agriculture, in spite of the differences observed in the rates of return between farms of various sizes. The consequences of this hypothests on the evolution of the agricultural sector are then examined. There is no optimal size of farm. Existing sizes can range between a minimum, corresponding to a level of subsistence for the poorest farms, and a maximum, at a size beyond which economies of scale appear in industry. When, as a result of some technical progress, economies of scale develop in whose scope consequently tends to shrink progressively.