BENEFIT FROM ECONOMIES OF SIZE
Farmers who share in a gain in efficiency can enjoy a higher net income As indicated in the preceding section, one may expect in-plant costs to decrease as the size of operation increases for many of the input supply and product marketing firms serving farmers. Fixed costs of management are spread over greater volume, larger machines use less, labor per unit,larger storage structures cost less unit of capacity and per so on. At some point, as these plants get larger and larger economies are offset by higher costs of product assembly or input distribution (Figure 8.2.) But the least-cost size and location of these individual businesses is not consistent with the large number of farm product buyers and input sellers needed to ensure competition at the local level.