A new proposal to evaluation of economies of scope and scale in the swines, chickens, and maize production system

Abstract

This research's primary objectives were to present a methodology and evaluate economies of scope and scale in the production of swines, chickens, and corn in the agriculture of Microregion of Chapecó, western Santa Catarina. A cross-section econometric estimate of a multiproduct-multifactor cost function was performed, based on the 2006 Agricultural Census microdata. The results pointed to the existence of global scale diseconomies in all production classes and product-specific economies of scale in the three items, emphasizing increases in chickens' production. Global and product-specific scope economies were found in all production classes, more intense in those of lower value. The statistics support the economies of scope hypothesis in swines, chickens, and maize production system, consistent with the high concentration of family farmers who adopt this agricultural system in the analyzed microregion. The evidence suggests strong synergies in this production system, especially in family establishments with lower production values.

Keywords:
multiproduct-multifactor cost function; scope economies; scale economies; family farming; microdata from the 2006 Agricultural Census