The inverse farm size relationship revisited: a productivity benchmarking analysis of South African land reform beneficiaries

Chew, Euan

The inverse farm size relationship revisited: a productivity benchmarking analysis of South African land reform beneficiaries

Thesis / Dissertation

2026

Publisher

University of Cape Town

Department

School of Economics

Faculty

Faculty of Commerce

Abstract

This paper presents a novel application of the non-monotonic Stochastic Frontier model of Wang (2002) to South African agriculture in order to investigate the inverse farm size relationship. Using data for 1989 beneficiary farms from the Proactive Land Acquisition Strategy programme, the marginal effects of farm size, managerial capacity and extension frequency on inefficiency and output are estimated and the effect of the Recapitalisation and Development programme evaluated. The estimated results demonstrate that increased farm size is associated with decreasing returns to inefficiency reduction. For livestock farms beyond 2 415 ha land is no longer significant in affecting inefficiency. For mixed farms, the marginal effect of land in decreasing inefficiency is negatively correlated with farm size. For livestock farms in the 90th and 95th percentile of farm size, the marginal effect of increasing farm size is an increase in inefficiency although this effect is not significant. The nonlinearity of the marginal effects of farm size justifies adopting the non-monotonic Stochastic Frontier approach to model the inverse relationship.