An Economic View of the Debate on Farm Size in Saskatchewan: A Comment

In a recent paper in this Journal, Jensen (1984) continues the debate on farm size in Saskatchewan. In particular, he considers the relationship between farm size and efficiency "… to determine if it is necessary to have fewer and larger farms in order to gain cost efficiency …" Attention is focused on the notion of returns to size and the vehicle for analysis is estimates of long-run average cost (LAC) curves. Individual farm data are used for different farm types in the two years, 1977 and 1980. Equations are fitted to each farm type in each year. Hence, each estimated equation is based on cross-section data. The conclusion drawn from this analysis is that, "… at the frontier, constant returns to size are the norm in Saskatchewan agriculture" (p. 199). Moreover, "Governments could consider removing policies which favor large units …" (p. 198).