This study evaluates the economic effects of land fragmentation on agricultural production and hypothesises that fragmentation may benefit farmers by diversifying production risk among separate land plots with heterogeneous agronomic conditions. Applying a stochastic production frontier model to the Tanzania Living Standards Measurement Study data, we find robust evidence to support the risk-reduction hypothesis, as well as indications that fragmentation is positively associated with technical efficiency. We argue the low level of fragmentation in Tanzania may have limited its negative impact on efficiency, while crop diversification concurrent with fragmentation may have increased efficiency, leaving the net effect to be positive.
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