Farm productivity in Rwanda: effects of farm size, erosion, and soil conservation investments

Abstract

This paper examines the effects of farm size, soil erosion, and soil conservation investments on land and labor productivity and allocative efficiency in Rwanda. There were several key results. First, there is a strong inverse relationship between farm size and land productivity, and the opposite for labor productivity. For smaller farms, there is evidence of allocative inefficiency in use of land and labor, probably due to factor market access constraints. Second, farms with greater investment in soil conservation have much better land productivity than average. Those with very eroded soils do much worse than average. Smaller farms are not more eroded than larger farms, but have twice the soil conservation investments. Third, land productivity benefits substantially from perennial cash crops, and the gains to shifting to cash crops are highest for those with low erosion and high use of fertilizer and organic matter. Program and policy effort to encourage and enable farmers to make soil conservation investments, to use fertilizer and organic matter, and to participate in cash cropping of perennials will have big payoffs in productivity. Land markets that allow smaller farmers to buy land could also increase aggregate productivity.