Importance of Scale in Efficiency of Production

Globalization fosters increase in scale of production units: it is more efficient (by conventional economic standards) to grow 1,000 ha of soybeans than to grow 1 ha, because of economies of scale. Locally centered development is less economically efficient because fields that contain a wide diversity of crops are less amenable to large-scale cultivation. In a globalized economy, big is better than small. However, small can be better than big, when the approach to development is local, as illustrated by the following research projects.

One study carried out in Pernambuco, Brazil, examined two communities established as part of the Movimento dos Trabalhadores Rurais Sem Terra (MST) (Movement of Rural Landless Workers) national movement (March 2001). The objective of this program has been for the people to confiscate agricultural land that is unused or underused, form a community, distribute land among community members, and then demand that government recog nizes them under the national settlement programs. The study compared two communities, one that was relatively successful as judged by a survey of members, and another one that was unsuccessful by the same parameters. In the successful community, each family was allotted 2.5 ha, while in the other, the size of the plots was 7.5 ha.

The study showed that the community with the smaller plots was more successful for several reasons. Land-holders in the community with the larger plots were interested more in speculation than in improving agricultural production. They felt that sooner or later, national economic expansion would increase the value of their land, so they devoted most of their effort to ensuring that all of their land was under production. They feared that if any of their land was idle, squatters would move in, or it would be given to someone else. The result was extensive use of the land that stretched management requirements beyond the capabilities of the land-holders. Crops were ill tended. Some farmers hired helpers, but the quality of the work by hired hands was poor. In addition, these farmers used bank credit to buy farm chemicals and seeds, but the bank gave them no choice as to which crops they should plant: they required manioc (Manihot esculenta) because the national and international market for this root crop was well established. However, prices for manioc were so low that it was difficult or impossible for the farmers to make enough profit to cover their loans. Communication between community members was also poor. Because of the large area, some members had to walk half a day to attend community meetings, and, consequently, attendance was poor.

In contrast, the farmers with the smaller plots worked their land more intensively, and produced a variety of crops that were more attuned to the continually changing local market. The plots were worked by family members who were more effective than hired hands. Families often incorporated cattle and goats as a source of manure to fertilize their crops and to produce milk and cheese for the local market. Because the plots were smaller, distances were shorter, and there was better communication between members of the community and the community leader.

Another study in the Amazon referred to previously in this chapter showed a similar result (Castellanet and Jordan 2002): in a settlement program for the Amazon, settlers were given 100-ha plots in the region surrounding Alta-mira. Farms on large areas (100 ha) were less successful than small farms (7 ha). At first, most of the settlers lived on their land, because they wanted to validate their claim to the land. However, because of the poor dirt roads, transportation of agricultural commodities (mostly rice and corn) to the market in Altamira was impossible during the rainy season, when most of the crops were harvested. Also, social services were lacking in the remote regions. Visiting a doctor or going for supplies required days of travel. Access to education was a problem. Consequently, many farmers abandoned their farms, moved closer to Altamira, and bought small parcels of land, typically between 3 and 20 ha. There, with the help of non-governmental organizations, they began planting perennial crops such as black pepper and cocoa that were better suited to the rain forest environment. Shifting cultivation, as was done on the 100-ha plots, was no longer necessary.

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