Abstract:
In this paper scope economies for a sample of 387 farms in the Punjab
province of Pakistan were estimated using nonparametric techniques and
sources of economies of scope were determined by using econometric
techniques. The result indicated that diversified farming in crop, livestock and
custom hiring enterprises results in cost savings of 17.81% for all enterprises,
17.36% in the crop sector, 15.84% in the livestock sector and 1.90% for
custom hiring. Econometric results indicate that overall economies of scope are
inversely related to farm size, positively to location of farms nearer to the head
reaches of canals and positively to the amount of capital used on a farm. The
existence of Scope economies in Pakistan agriculture implies that production
functions in agriculture are interdependent and the effects of Government
policy of setting support prices of individual crops may affect resource
allocation with respect to other crops on the same farms.
