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Abstract
farm size inequality is a natural outcome of farm specialization and the
advantages of scale economies for more successful farmers, but it could
weaken the common interests among farmers and thus their political power.
This is especially true for farms that are organized in cooperatives, such as
the Israeli Moshav. The weakening of cooperation in the Moshav since the
1980s has contributed to increased farm diversity in both size and
specialization, and this in turn further weakened the cooperatives and
reduced their ability to use political power to promote common interests.
The purpose of this paper is to analyze the changes in farm size inequality
among family farms in the Moshav sector between 1971 and 1995 and their
determinants. We take advantage of two decomposition methodologies that
have been used previously to analyze income inequality: decomposition of
inequality by income sources and by regression. Each of these methods is
applied to two inequality indices: the Gini coefficient and the CV index.
Farm size is measured by the normative value of output, and outputs of
different farm products represent different income sources. We use data
from the two recent censuses of agriculture in Israel, 1971 and 1981, and
subsequent 1995 farm survey that was based on the census questionnaires.
We find that farm size inequality has increased over the years. The
decomposition by type of farm products shows that farm size inequality
stems primarily from size inequality within poultry and beef farms. The
decomposition by regression attributed most farm size inequality to capital
stock and unobserved factors. While the importance of capital stock
diminished considerably over the years, the slack was not captured by other
explanatory variables but rather by unobserved factors, so that over the
years it became more difficult to describe and explain farm size inequality.