Comparative Analysis of farm sizes and Efficiency

📌 General Observation:

It is often observed, and empirically supported in several developing countries including India, that as the size of the farm increases, the per acre yield decreases.
This leads to the conclusion that small farms are more efficient than large farms.

The Economic Behaviour Argument: Marginal Output Approach

Let’s understand this through the lens of marginal productivity.

• Large Farms:
  In capitalist farms or large landholdings, the landowner will hire laborers and cultivate land only till the point where the cost of hiring an additional laborer equals the revenue earned from that laborer.
  👉 This is the economic point where Marginal Output = Wage.
• Small Farms:
  These are mostly family-run farms. Even when the productivity of the last family member is zero, they still contribute, because there’s no wage to be paid, and every little effort helps.
  👉 Here, cultivation continues even when Marginal Output = 0, thus increasing total output.

🔍 Analogy: Think of a family-run shop where every member works regardless of how much extra profit their work brings. Compare that to a mall store that only hires when it pays off directly. Which one uses its human resources more completely?

The Fertility Argument: Land Quality Distribution

• During times of distress, small farmers often sell the less fertile parts of their land to richer landlords.
• Over time, large landholdings end up with poorer quality soil, reducing their productivity.

👉 So, small farms, which retain the more fertile portions, naturally perform better per acre.

The Operational Efficiency Argument: Utilisation and Incentive

• Small Farmers:
  Their entire livelihood depends on their limited piece of land, so they:
  • Use inputs like seeds, water, and fertilizers efficiently.
  • Put in maximum effort and supervision.
  • Have high emotional attachment to the land.
• Large Farmers:
  • Often have scattered plots, making management difficult.
  • Rely on tenants or hired labor, who may lack personal incentive.
  • Tenants do the bare minimum, as they don’t own the produce.

🔍 Real Insight: Ownership = Accountability. The person who owns and tills the land tends to care more about its productivity than a hired hand.

The Absenteeism Argument: Supervision and Innovation

• Owners of large farms are often:
  • Absentee landlords (living in cities or elsewhere),
  • Or engaged in politics, business, etc.

👉 They lack time or interest for:

• On-ground supervision,
• Innovative practices (e.g. crop rotation, organic farming),
• Yield-maximising techniques.

Whereas, small farmers:

• Experiment more,
• Adapt to local needs,
• Aim to maximize output, not just profit.

🔁 Profit vs Output Philosophy:

Large farm owners aim at profit maximization (TR – TC is maximum),
While small farmers aim at output maximization (produce as much as they can, since they consume what they produce or sell directly).

📌 Conclusion:

“Small is not just beautiful—it is also productive.”

Whether it’s economic logic, land quality, personal incentive, or supervision, small farms often emerge more efficient per acre than large ones. This is especially true in developing agrarian economies like India, where emotional, social, and survival factors deeply influence agricultural behaviour.