4. In development economics, an ongoing debate on farm size and productivity
inverse relationship (IR) exists. It is argued that small farms are more
efficient as these can use more efficiently resources like family labour with
enhanced capability to closely monitor their production activities.
Sen (1962)
is the first to discover that productivity per acre decreased with increase in
size of holding in India. He found empirical evidence regarding small
farmers’ relative superiority with regard to per unit land productivity over
large farmers largely based on aggregated data.
However, the statistical validity of the
‘inverse relation’ has been challenged in early 1970s by his contemporaries
in the region, who based on analysis of dis-aggregated data relating to
individual holdings, came up with results contradicting the hypothesis that
yield per acre falls as farm size increases.
5. In the next two decades, rapid movement of industrialization in
Asian countries resulted in urbanization led to demand for labour from rural
areas; small labour intensive farms are reckoned as a major obstacle in this
process as. In addition, the availability of cheaper modern inputs like
fertilizer, pesticides, farm machinery etc. that reduced the labour demand
rapidly in the peak seasons, small size farms became less productive when
accounted for the opportunity cost of labour.
Sengupta (1997) in the context of West Ben
gal, reported that the inverse relation between farm size and pro
ductivity was stronger in agriculturally developed regions.
With the advent of the
Green Revolution, researchers showed that the inverse relationship between
farm size and land productivity is diminished or even reversed, as agriculture
becomes more capital intensive.
6. In the last decade of twentieth century, “the small is beautiful” view
once again started to gain importance. Old cropping patterns
had improved, for example, from cereals to cash crop, from crop to
horticultural and livestock products, in which small farms again started to
gain comparative advantages over the large farms.
There are indications that this opinion no longer holds true to an
increasing extent. The many technological changes and the expansion of
commercial farming seem to have changed the picture. Using the same
technology as employed on the large farms, the smallholder was more
productive in the past because of his greater labour input. During the 70s,
however, progressive and commercial farmers started to employ a higher
level of technology. The small farmer was frequently unable to compete,
especially as the rapid sequence of new technological inputs required
investments that went beyond his capacity.
7. It is obvious that most of the smallholders could not cope with such a large
volume of investment requirements within a short time. Quite a number had to
give up farming following financial losses due to failure, or because they
realized that they could not cope with the new requirements.
Today it appears as if middle-sized farms turn out the highest productivity,
while smallholders are increasingly unable to provide their cultivating family
with a decent living. Due to shrinking farm size, they have to look for
additional income, thus taking labour input away from the farms. The younger
generation in particular is losing interest in cultivation.
