Published in Scientific Papers. Series "Management, Economic Engineering in Agriculture and rural development", Vol. 17 ISSUE 2
Written by Tal SHAHOR, Liron AMDUR, Moshe BEN SHAHAR

In Israel, like in most other countries, there are primarily two types of farms: small family farms and large cooperatives. In recent years, with the development of technology which reduces the need for labor and increases the need for capital, the question arises, “in today’s world, is there still a place for small family farms?” In order to answer this question, we designed a comprehensive study to test this subject from a number of perspectives (socially, culturally, etc.). This article looks at the economic aspect of this larger study and it deals with the question of the smallest possible size of a farm, that is still economically viable. The study was done for the citrus industry, one of the main agricultural industries in Israel. For the study, we estimated the partial elasticity of production for an orchard with respect to its size and found the point at which average production reached a maximum. According to accepted economic theory, this point shows the minimal size of an economically viable, independent agricultural unit. The results of the study show that in this industry, the minimum size for an economically viable farm is about 30 dunams (1 dunam = 1,000 m2 ). In Israel, the size of about half of all family farms is larger than 30 dunams. The immediate conclusion is that there is no reason to assume that an orchard run by a small family operation must be economically unviable. If small family farms adopt the correct organizational structure, not only at the stage of growing the fruit but also at the stage of marketing, it might be possible for at least some of them to be profitable and economically justified. Owners of the smallest farms can partner with their neighbors in order to reach the desired farm size.

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