The agriculture industry has lately been faced with deliberations on the stance of small- and large-scale farming with economic growth. Owner-operated farms have been argued to be responsive to new markets and technologies. A laudable example is the Asian green revolution where hordes of small-scale farmers contributed significantly to combating the food crisis on the continent. This has afterward placed the category in the middle of development talks.
Recently in some regions, however, it seems as though the bigger production holdings are becoming the frontiers in delivering raw consumables, leaving smaller operators behind. This then begs the question “what could be happening?”
Factors Contributing to the Rise of Big Farms
The transcendence of farmlands doesn’t happen in a blink. Some factors regarding manpower and operational requirements, among many others are involved. While some of these are known broadly, others are less apparent.
- Scarcity of cultivators in low-populated regions
In sparsely populated areas, large farms have been discovered to pioneer agro-based productions. Since these locations have low dwellers, there are either zero or few cultivators with little to no experience in the industry. This gives room for these big-sized farms to take control of their food supplies, impeding the emergence of budding smallholdings.
- The rising demand for validation of social and environmental sustainability in high-income countries
Consumers in North America and Europe especially are known to be outspoken about sustainable environments. Hence the recurring clamor for certification of bulk commodities (farm products inclusive). In this scenario, small-scale farms may find it challenging to go head-to-head in the market with bigger firms. Aside from that, the high cost of validation and preservation of product identity favors larger operators.
For instance, the law that disapproves of the open burning of sugarcane before harvesting due to carbon emission equally prohibits manual harvesting. Here, specialized smaller holdings are grossly disadvantaged.
- Technical evolution
The entire farming practices have taken consistent turns with the progressiveness of technology. And essentially, the benefits are tilted in favor of large harvesters. From land tillage via tractor hire to crop breeding, management is easier and economical for production. Also, the accessibility of information technology and geographical mapping has trivialized traditional knowledge while making strategic farming decisions. These have also made adaptation to changing climate and markets easy for these farms.
- Growing interest of private sectors in agriculture
This factor provides an opportunity for farmers in developing countries to capitals to begin their journey in food and livestock production. In densely populated regions, investors are interested in functioning through various schemes. An example is contract farming which involves merger farms producing far less than their capabilities.
- Flexibility of methods
Suppose the market isn’t bringing forth anticipated returns, different large operational units can limit transaction costs. Instead of massive production, they can try out vertical integration. Fortunately, when the market experiences a financial downfall, firms that are horizontally and vertically integrated have good chances of access at reduced costs.
Over time, large farms have emerged due to policy changes and market outcomes. Many of these have to do with technological infrastructures, finances, rights, etc. In the absence of these, family-owned farmlands might as well have a competitive advantage in the industry.