Second, a discussion of key determinants of the way the agricultural sector is organized highlights that, while large operations have historically had a dominant role in plantation crops, agricultural production, in contrast to marketing or processing, is not characterized by significant economies of scale. Larger units have advantages in accessing credit or lumpy inputs but the ability of family farms to overcome these through collective action, together with owner-operators’ superior incentives for exerting effort imply that, in contrast to other industries, farming is still dominated by family-owned businesses. A key reason for operational farm sizes to increase over time.
