Working Paper No. 1221

Farm Size, Technology Adoption and Agricultural Trade Reform: Evidence from Canada

Published: June 20, 2018Pages: 36Keywords: Agricultural Trade Liberalization; Export Subsidy; Technical Change; Farm Size; Firm HeterogeneityJEL-codes: F14; O13; Q16; Q17; Q18

Farm Size, Technology Adoption and Agricultural Trade Reform: Evidence from Canada W. Mark Brown, Shon Ferguson and Crina Viju


Using detailed census data covering over 40,000 farms in Alberta, Saskatchewan and Manitoba, Canada, we document the vast and increasing farm size heterogeneity, and analyze the role of farm size in adapting to the removal of an export subsidy in 1995.

We find that larger farms were more likely to switch to new labor-saving tillage technologies in response to the large negative shock to grain prices caused by the reform. Small- and medium-sized farms responded to the reform by adopting the more affordable minimum tillage technology. We develop a simple model of heterogeneous farms and technology adoption that can explain our findings.

The results suggest that farm size plays a crucial role in determining farm-level adaptation to agricultural trade reform. Consistent with the Alchian-Allen hypothesis, the increase in per-unit trade costs due to the reform was associated with farms shifting their production of crops from low-value wheat to higher value canola. 

Shon Ferguson

Contact

Ph: +46 8 665 4523
shon.ferguson@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

Pages-from-2019-Oxelheim-m.gif

This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

About the book

Events

Seminars organized by IFN

 

To present ongoing research informal brown-bag seminars are held on Mondays at 11:30 am. This is an opportunity for IFN researchers to test ideas and results.

Academically oriented seminars are most of the time held on Wednesdays at 10 am. At these events researchers from IFN and other institutions present their research.

In addition, IFN organizes seminars open to the public. Topics for these are derived from the IFN research.

Research Institute of Industrial Economics, Grevgatan 34 - 2 fl, Box 55665, SE-102 15 Stockholm, Sweden | Phone: +46-(0)8-665 45 00 | info@ifn.se