Do small farmers have higher productivity than large farmers?

It is commonly heard today that small farmers produce most of the world’s food. But how many of us realise that they are doing this with less than a quarter of the world’s farmland, and that even this meagre share is shrinking fast? If small farmers continue to lose the very basis of their existence, the world will lose its capacity to feed itself.

Such claims are made by several reports in recent months [1].  At the core of the argument is the claim that small farmers are more productive than large farmers, i.e. that they produce more food per acre of land than large farmers.

Obviously, the claim raises some questions:  Are small farmers really more productive than larger ones?  Is this true in India or only in other countries? If true, what are the causes of this higher productivity?  Could industrialized farms improve their productivity by copying the mechanisms used by small farmers? Or, must the large farms be turned over to small farmers for this to work?

The India Data

In India, small and marginal farmers are defined as those with less than 2 hectares of land.  In 2002-03, such farmers made up ~80% of all farmers in India and together they owned about 43% of total land in the country [2].  According to an estimate, they operated about 46% of total land and generated about 51% of total agricultural output [3].

Estimates of productivity ratio (output per hectare by value) of small and marginal farmers to that of large farmers range from 1.25x to 2-4x [3, 5].  That is, productivity of small farmers is greater than that of large farmers. In fact finer analysis often shows a inverse relationship of productivity with farm size:  As farm size increases, productivity (output in Rs. per hectare) declines.

This “inverse relationship” is a contested topic with different researchers attributing it to different causes and some even questioning how real it is.  But since this inverse relationship is at the core of recent debates about small vs. large farms, it is useful to examine it closely.

In productivity analysis, output is measured in terms of value of crops not quantity of crops, to make comparison across different crops possible.   Imagine two farms, a small farm and a large farm.  Let’s assume that the large farmer grows a low value crop, while the small farmer grows a high-value crop.  In such a case, the per-hectare (ha) value of small farmer output can be larger than that of the larger farmer.  So the very first question to ask is about differences in crops produced by small vs. large farmers.

  1. Do small farmers grow different crops than large farmers?

It turns out that the answer Small farmers crop choiceis yes.  Many small farmers select crops primarily for subsistence but sell any surplus they have; such farmers often produce millets, rice, vegetables, etc.  Other small farmers focus on growing “high-value crops” such as vegetables and fruits.  (Interestingly, 10-20 years ago, fruits were the exclusive domain of large farmers, but now increasing numbers of small farmers are cultivating fruits).  Larger farmers usually grow cereals, soyabean, sugarcane, and such crops.  The table below shows details for fruits and vegetables; for other data, see the references [6]. Thus the higher productivity of small farmers is not entirely an apples to apples comparison; it almost literally compares apples with, well not quite oranges, but with wheat and rice.

  1. For the same crop, are small farmers more productive?

I couldn’t find enough studies in India so I’m not convinced yet, though I did find one study which supported this conclusion. A primary survey which compared rice yields by farm size in Allahabad revealed that the inverse farm size-productivity relationship holds even for the same crop [4]. The same study also showed that this inverse relationship is not universal: In China, a parallel primary survey showed that rice yield per ha increases with farm size. And in both countries, yields increase with greater mechanization.

  1. Even if small farmer productivity is higher for same crop, what are the causes?

Studies point to various possible reasons for higher productivity, such as greater proportion of irrigated land among small farmers, greater fertilizer use (which is 1.5-4X higher among small farmers), slightly higher adoption of high-yielding varieties by smaller farmers, and greater farming intensity, that is, the number of crops grown per year (15% higher among small farmers) [5].

Several studies also point to greater labour intensity of production.  My own anecdotal discussions with farmers also indicated this: Because small farmers are more desperate to eke out a living from their parcel of land, they (especially the women of the household) invest greater time in caring for their fields compared to large farmers who often take a hands-off approach.

  1. Does this mean that we should hand over the world’s farms to India’s small farmers? 

Well, not quite so fast. For most crops, average productivity of Indian farmers is much lower than (half to a third) that of global averages, often even a quarter of China’s productivity [7].  While this is a comparison of average productivity, it is still indicative of small farmer productivity in India since more than 50% of the country’s output comes from small farmers. Taking all the land in the US and farming it the way Indian small farmers do, would actually decrease global productivity and global food production.  So handing over large farms to small farmers may not be a wise decision.

  1. Beyond productivity: Other problems with small-farmer production approaches

As we saw earlier, small farmers use intensive farming methods such as greater use of fertilizers, water, etc.  So it is possible that on average the techniques used by small farmers may cause worse ecological impact in some aspects than large farmers. In fact, a recent initiative to provide better agricultural information to small farmers saw a reduction in use of such inputs by small farmers.

Secondly, small farms are labour intensive, and leverage free and upaid labour of household members who are underemployed due to lack of other options.  The per capita productivity of small farms is in fact much lower than that of large farms [5]. So, even if productivity gains were real, it may not be ideal to promote more underemployment around the world.

Thirdly, one of the reasons why small farmers work so hard to achieve higher output is because they don’t have an alternative.  Among small farmer households, an average of 5 people depend on 2 acres of land, and there is extreme pressure to extract as much as possible through intensive farming and “free” family labour.  Medium and large owners have the benefit of more land (and greater total income) and therefore don’t need to squeeze out all they can from their land.

The average Indian farming household earns barely Rs. 6400 per month on average (this amount is for the whole household, not per capita). Incomes of smallholder farmers are even lower.  National data shows that farms below 2 hectares (i.e. small and marginal farms) are, on average, unable to meet the basic needs of farming households.  While their per acre output (“revenue”) might be higher their costs are higher due to greater use of inputs and also because they pay more for them per unit because of exploitative market practices.

Thus, idolizing small farms based on a unidimensional view of “productivity” is fallacious (both in terms of data and its implications).  Blindly converting all farms to small farms implicitly implies promoting intensive farming practices borne out of desperation.

6. There are better arguments in favour of supporting small farmers and land reform

The current agricultural production system in India is highly problematic and in dire need of change.  But using fallacious arguments about relative productivity of small farmers to justify change towards more sustainable farming does not serve much purpose and may be counter-productive.  A much stronger argument for supporting small farmers and land reform is also the simplest one:  equity and social justice.

ENDNOTES AND REFERENCES

  1. See GRAIN report  and George Monbiot in The Guardian  and response 
  2. 2005. “Situation Assessment of Farmers: Some Aspects of Farming, NSS 59th Round”, New Delhi: Government of India. While more recent data is available on ownership, for consistency with productivity data, we will use the 2002-03 NSS data.  The table below highlights the land ownership changes between 2002-03 and 2012-13 (from NSS 2014 report on 70th Round).

Small and marginal farmers

  1. “Operated” can include land leased-in from other farmers. Source: Dev, S. Mahendra. 2011. “Small Farmers in India: Challenges and Opportunities.”
  2. Wang, Jianying, Kevin Z. Chen, and Sunipa Das Gupta. 2015. “Is small still beautiful? A comparative study of rice farm size and productivity in China and India.” China Agricultural Economic Review 7 (3): 484-509.
  3. Chand, R., P. L. Prasanna, and A. Singh. 2011. “Farm size and productivity: Understanding the strengths of smallholders and improving their livelihoods.” Economic and Political Weekly 46 (26): 5-11.
  4. Birthal, P. S., P. K. Joshi, D. Roy, and A. Thorat. 2013. “Diversification in Indian Agriculture toward High-Value Crops: The Role of Small Farmers.” Canadian Journal of Agricultural Economics 61: 61–91.
  5. FAO.org. Accessed 19 October 2015. Datasheet: https://docs.google.com/spreadsheets/d/1xvLORqVm0FFxd-ohF5a65xTQFJlYl3pKrAmQy-3dP-w/edit?usp=sharing
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3 Responses to Do small farmers have higher productivity than large farmers?

  1. libytj says:

    You are arguing against making farm sizes smaller. It will also be educative to look at the pros and cons of land consolidation in favour or larger production systems. Quite agree with you that the productivity argument is a nice ‘armchair activism’ bravado. But that should not prevent us from looking at intensifying ways of productivity enhancement for small producers.

    • Richa says:

      Yes, I agree that we should invest in productivity improvement, input use/cost reduction, judicious irrigation, information and so many other things for small producers. We should also look at some degree of land consolidation so that each parcel of land has a minimum level of economic viability.

      I get concerned when I see people using selective and shallow data analysis to support their cause. We could make so many better and defensible arguments against industrialized farming system; productivity need not be (and cannot be) one of them.

  2. Pingback: Small farmer productivity | Stirring the Pyramid

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