Constant Returns to Scale in Ukrainian Agriculture?

Renowned world bank economist Klaus Deininger with co-authors recently published a report which studied the performance of super large farms in Ukraine compared to smaller scale farms. The results (on this question) were, well, ambiguous. This is reminiscent of Lerman et al's 2007 report which investigated whether smaller-scale family farmers (fermeri) in Ukraine (the average size of such a "family farm" is around 100 ha) are more efficient than larger scale farms (The Lerman et al report did not take into account the super large farm phenomenon as it was still an emerging trend when they were gathering data). Lerman et al's results were also ambiguous, i.e. "smaller-scale" family farmers were shown to have similar total factor productivity as larger scale corporate farm enterprises. So, here we have two competing theories. One, the so-called inverse-relation argument is that smaller-scale family-managed and owned farming is inherently more efficient than larger-scale operations. The other is that new technologies, plus a superior ability to access capital, allow super large farms to overcome some of the traditional obstacles that large-scale operations face (transaction costs, etc...). The empirical results in Ukraine do not support one or the other position (yet, it should be said). 

Nevertheless, Deininger et al show some really fascinating results. One is that raioni (municipalities or second level administrative units) that in 2001 had more concentration of land under fewer farms exhibited poorer productivity growth by 2011 compared to raioni with less concentration of land in 2001. Deininger et al's data show that much of the productivity growth between 2001 and 2011 is due to newer, more efficient actors entering the markets, so the presumption is that relatively high land concentration prohibits market entry of new actors. 

Second the geography of large-scale production has shifted. If in 2001, larger scale farms were concentrated in the east and south, they are now (in 2011) concentrated in a band stretching across the north of the country. 

By the way, their data did in fact show that output was highest for farms between 30,000 and 50,000 ha, but this advantage disappeared when they controlled for regional and farm level effects. Their data showed that profitability was highest for farms between 2000 to 3000 ha. 

One has to wonder does the Ukrainian evidence indicate that there are constant returns to scale in agriculture, as Deininger et al suggest, or does it show that Ukraine is where economic theories go to die?