Farm Size and Land Use Efficiency in Pakistan’sAgriculture

In this paper we analyzed the relationship between the farmsize and economies of scale in the extensive and intensive use of land.We found that the defmition of farm size in terms of linear aggregationof the irrigated and unirrigated lands leads to the misspecificationbias, resulting in the under-estimation of the degree of homogeneity ofthe functions. The implications of the above analysis are fairlyobvious. First of all, the one-dimensional defmition of farm size interms of total land size without distinguishing between the irrigatedand the unirrigated lands not only mis-specifies the functionalrelationships between farm size, on the one hand, and land use and othereconomic variables, on the other hand; but, more importantly, it alsounder-estimates the returns to scale value, thereby leading toover-estimation of possible benefits from the re-distribution of land.Secondly, the division of lands into irrigated and unirrigated bringsout the importance of irrigation in determining the levels of theextensive and intensive uses of land and goes a long way in explainingthe inter-farm size as well as the intra-farm size variations in landuse intensities. Thirdly, explicit estimates of the positive impact ofirrigation on land use and productivity clearly indicate that there isan alternative policy for radical land reforms to bring aboutsignificant changes in the distribution of agricultural income andassets. That alternative policy is to use irrigation development anddistribution, which are predominantly under the direct or indirectcontrol of the government, as policy tools to help the small andmarginal farmers.