Does Land Fragmentation Increase the Cost of Cultivation?

Abstract

To appreciate overall impacts of fragmentation, underlying channels, and potential heterogeneity by holding size, we distinguish average fragment size and mean inter-fragment distance as two aspects of this phenomenon. Estimating a cost function with associated input demand equations on a large nationally representative Indian survey, robust to endogeneity, suggests that fragmentation’s main impact is to reduce mean plot size below the threshold for mechanization. Higher inter-fragment distances increase costs for larger holdings, but by a much smaller magnitude. Implications as to when programs to consolidate holdings may make sense and ways to ensure their sustainability are discussed.