The relation of cost economies to size of farm has been a subject of considerable speculation in Iowa. Farmers are interested in farms of different sizes because cost advantages or disadvantages have an important bearing on farm profits. Other segments of the population have also been interested in size and scale economies in farming. Many people put forth the hypothesis that modern farming methods give very great cost economies to the large acreage. The supposition is: "Mechanization results in very low per-acre costs for large units and a danger exists that these cost advantages will give rise to large-scale units which cause the liquidation of family-farm units." Whether or not a threat of this nature actually exists depends on the costs associated with farms of different sizes.
Discussion of farm size has gone on with very little knowledge of the cost economies realized in different types of agriculture. Certain aspects of cost are, however, evident: (1) Cost economies are likely greatest in grain and crop farming systems; mechanization has been developed particularly around these enterprises. Important changes have taken place in production of livestock. fruit and vegetable crops. However, the adaptation of mechanization to these enterprises has not been great. (2) If foods and fibers are to be produced efficiently, and farm families are to have favorable incomes, the size of the farm must be great enough to attain some of the efficiencies inherent in mechanization. Farms that are too small will result in low income.
Heady, Earl O.; McKee, Dean E.; and Haver, C. B.
"Farm size adjustments in Iowa and cost economies in crop production for farms of different sizes,"
Research Bulletin (Iowa Agriculture and Home Economics Experiment Station): Vol. 32
, Article 1.
Available at: https://lib.dr.iastate.edu/researchbulletin/vol32/iss428/1