4. Farm size and productivity

In the late 50s, farm management data showed that production per acre on large farm is distinctly smaller than that on small ones (Dantwala 1959; Sen 1962; Bardhan 1973, Bharadwaj 1974, Bhalla 1979 and others). Therefore, if small farmers are indeed more productive, then it follows that land redistribution that is desirable from an equity stand point would also lead to a higher output. Recent trends in productivity of marginal and small farmers as compared to other groups require attention in the context of growing proportions of small and marginal farmers. A large number of field studies from different parts of the country suggest that the relationship has been weakening for sometime (Parthasarathy 1987). Based on ICRISAT village level data, Ballabh and Walker (1986) analysed the nexus between farm size and productivity at the household level. Land productivity was hypothesized to depend on household resource endowments, personal characteristics and village and cropping year effects. Regressors in the vector of resource endowments included irrigated area, land value, bullocks, farm size, family labour and the degree of land fragmentation. Age, education, and caste of the household comprised the set of personal characteristics. The results are reproduced in Table 3. The results suggest that the farm size is inversely and significantly correlated with land productivity only in two of the five regions. In Mahbubnagar (Andhra Pradesh) it is negative and insignificant; in other two regions Akola (Maharashtra) and Sabarkantha (Gujarat) positive but insignificant. Production relation hypothesis of Binswanger and Rosenzweig (1986), served as a point of departure for Ryan and Walker (1990) in analysing nexus between farm size and productivity. Binswanger and Rosenzweig hypothesized that the scale of owned and operational holding should have different consequences on land productivity. Holding owned area constant, expanding the scale of operation through renting or share cropping in area, should be associated with decreased land productivity and vice versa. Ryan and Walker (1990) did confirm the hypothesis of Binswanger and Rosenzweig. These results confirm that either the nexus between farm size and productivity was not understood properly or the negative relationship is weakening in recent times. These results have important implications in the sense that division of land holdings would result into productivity loss unless corrective steps are taken to improve the productivity of small holdings. Some factors in this regard are discussed below.