DETERMINANTS OF FARM PRODUCTIVITY AND THE SIZE-PRODUCTIVITY RELATIONSHIP UNDER LAND CONSTRAINTS: THE CASE OF RAWANDA

Despite its importance in agricultural development, the oft-observed inverse relationship between farm size and land productivity in developing countries has received very limited attention in Africa. This work tries to fill the gap by analyzing the relationship between farm-size and productivity in Rwanda. Our results confirm the existence of an inverse relationship between farm-size and land productivity. Smaller farms have a lower opportunity cost of labor and a higher shadow price of land compared to larger farms. These disparities are the results of constraints faced by smaller farms (a) to access land, and (b) to access labor market opportunities. The observed relationship is affected by land quality proxied by erosion (average annual soil loss), percentage of area fertilized and investment in soil conservation, and by the share of high value crops in gross value of output. Major implications to draw from the study include the necessity to (a) control market imperfections in rural Rwanda; (b) invest in land improvement (fertilization and soil conservation devices); and (c) promote high value crops.