The Economics of Land Consolidation in Family Farms of Moldova

Abstract

The paper investigates the current situation with fragmentation of family farms in Moldova and its effects on family well-being and farm productivity. A key hypothesis is that consolidation of agricultural land in Moldova has beneficial effects in terms of productivity and is desirable in the long run. We examine the case for market-driven land consolidation using data from several recent surveys in Moldova. We show that, in the individual sector, larger farms consume less of their output and attain higher levels of commercialization. Larger individual farms thus have higher revenues from commercial sales and generate higher family incomes. Farm augmentation accordingly makes a positive contribution to the well-being of the rural population. The extent of parcel consolidation is directly correlated with the relative efficiency of farms: consolidated family farms are more efficient than those with fragmented holdings. Hence, land consolidation leads to better economic performance of family farms.