The Farm Size – Productivity Issue
During the discussion of the pros and cons of land reform,
the old debate on the relation of farm size to productivity
experienced a revival.
After World War II, the consensus was that small farms exhibited
the highest productivity while physical output and labour
investment decreased with increasing farm size. This assumption
corresponded with the empirical findings. It is worth mentioning
that at the time landlords, large farms and smallholders employed
– with only a few exceptions – traditional technology.
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.
During the initial years, in particular, the new technology
was not accessible to him, and the low level of information
led to false investments resulting in financial losses which
prevented future investments.
An indication of this process is the sequence of rapid technological
inputs within the process of the so-called ‘green revolution.’
The new varieties required the purchasing of expensive seed
at the beginning. Soon the existing irrigation facilities
had to be improved by the addition of tubewells in order to
ensure the availability of a timely and adequate supply of
water. The low resistance to insects and pests necessitated
the use of chemicals. Once seed and water were under control,
the traditional bullock plough proved to be the next bottleneck
in the attempt to increase productivity, and thousands of
tractors with machines were bought within a short time. This
made it unnecessary to employ great numbers of tenants who
owned bullocks, and very many were dismissed. This, once again,
led to the substitution of herbicides for manual labour, and
the introduction of mowing and threshing machines to carry
out the harvest work.
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.
This was at least in part due to the absence or imperfection
of institutions for assisting smallholders to overcome their
limitations. A more efficient cooperative system of credit,
supply and marketing as well as of supporting production by
group activities, the use of machinery etc., could have led
to other results than those which we experienced during the
But most likely the process will go on; perhaps it will
even increase on the basis of a second ‘green revolution’
caused by biotechnical development. Who will be able to pay
for the improved seed that will be primarily offered by private
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,
a process that will be discussed in detail later.
One can certainly still find traditional landlords with
all of the consequences of the system, but more and more frequently
they (and their sons) take up intensive commercial farming
instead of extensive cultivation employing small tenants.
By doing so, they increase, or at least maintain the size
of their standard of living even after the size of their landed
property has been reduced. At the same time, they do what
governments have always asked them to do: increase the production
of food in order to satisfy the needs of the urban population.
As a result, an important argument in the land reform discussion
– the low productivity of large farms – ceases