Farm Size and Productivity Debate in Indian Agriculture

This paper shows the statistical validity of the farm size and crop productivity relationship after five decades of the advent of the green revolution. The results indicate that the inverse effect of farm size on productivity is visible at an aggregate level, but the relationship varies across crops. After controlling the farm-specific characteristics, the inverse relationship is even stronger in the eastern and central states for cereals and oilseeds, but the relationship is either neutral or positive for non-grain high-value crops in Punjab and Haryana. The inverse relationship between farm size and productivity relationship is not significant in agriculturally advanced states because of the capital intensive use of land by medium and large farmers. From a policy perspective, larger farm size with a higher level of irrigation intensity and input use can explain the higher productivity level and variation in farm size and productivity relationship across states.

The most crucial concern of agriculture in India is the growing marginalisation and increased inequality in land distribution. The inverse relationship (hereafter, IR) between farm size and productivity is a “stylised fact” in many developing countries, including India (Bardhan 1973). The adv­antageous position of small farms was first conceptualised in the Chayanovian model of “small is beautiful” where family labour-led small farmers had relative superiority in terms of productivity (Chai︠a︡nov and Čajanov 1986). In India, around 86% of total holdings are marginal and small constituting 46% of operated land (Agriculture Census 2015–16). In this context, agricultural productivity is a sine qua non for the economic betterment of a large section of farmers in India. With increasing urbanisation and transformation in land use patterns to non-farm activities in the countryside, an essential way to ensure food security and agricultural growth is augmenting the level of crop productivity.