PRODUCTIVITY varies according to farm size. A specific farm size may be more efficient in the production of certain crops while another may give better yield of different set of commodities. The variations in productivity may be attributed to the differences in labour input, cropping pattern and intensity and technological levels. This productivity gap leads to structural difference between small and large farms. Small and large farms, which differ on the basis of farm costs including cash and imputed costs, labour use, mechanization and management, have their own advantages and disadvantages.

The proposition that the small farmers are more productive than the larger ones has somewhat been modified after Green Revolution. It is assumed that big farmers adopt technology on a larger scale than the small peasants. The perception that big farms benefited disproportionately from the green revolution may have been caused by the initially faster adoption of green revolution technology by the large farmers. But once the benefit of the new technologies was proved, the small farmers adopted the same.

Nevertheless, the picture which emerged in the early days of the green revolution may not be representative of the later situation when there is more recent evidence to suggest that the green revolution technology is scale-neutral.

A well-known phenomenon, called the ‘inverse relationship (IR) between the farm size and productivity’ has been put forth by the researchers backed by the empirical evidences. The IR phenomenon was somewhat severe before green revolution but has weakened after green revolution or even reversed at certain locations.

A recent study in one of the districts of Punjab revealed that the inverse relationship between the farm size and productivity still exists with weakening tendency. The small farmers were getting about 12 per cent higher incomes from one acre cropped than the larger ones. There was also significant variation in terms of resource endowments, socio-economic set-up and profitability between the two farm categories.

Various justifications have been put forth to explain the weakening inverse relationship between the farm size and productivity. The ‘traditional’ small-scale peasant sector is assumed to be endowed with plenty of family labour with low or zero opportunity cost, while facing a severe constraint on credit.

The large-scale ‘modern’ or ‘capitalist’ sector, on the other hand, relies on more expensive hired labour but has better access to capital, so the traditional sector is relatively labour-intensive and the modern sector relatively capital-intensive. Clearly, this explanation is not unreasonable.

In fact, ample evidence suggests that the labour market imperfections are asymmetrical with respect to size. Thus, it has been found that the labour use intensity declines with the farm size and compared to the level implied by profit maximization at market prices, the marginal productivity of labour of small land holdings is lower and that of big land holdings it is higher.

A theory of labour market imperfections cannot fully account for the IR phenomenon, a fact which appears largely overlooked in the empirical literature. Only if farm size is considered constant then the differential labour costs lead to less intensive labour use and smaller output per acre on big farms. Thus, it has to be explained why farmers adjust labour intensity (and hence output) rather than modifying farm size to available labour either through rental or sales markets for land.

In other words, given the sizeable productivity differentials, why does the market mechanism not ensure that large farms are parcelled out and either sold or rented to landless and small peasants? Why are such highly unequal distributions of farm sizes observed - far too large to be construed as the result of different skills and education? Clearly, land tenure is important and interwoven with the inverse relationship.

Peasant agriculture is also subject to a credit constraint. Financial institutions routinely require collateral in the form of land or other fixed assets before offering loans. They may also operate minimum floors on loan size and fixed fees which essentially prevent small holders from obtaining the modest loans they need.

Farmers with access to credit are able to purchase modern inputs, can finance land improvements and can apply more capital per unit of land. The larger the plot owned, the less binding is the constraint on credit. This is a testable statement. Where the supervision constraint works on operated land, the credit constraint concerns owned land, since land rented cannot be collateralized.

Based on the findings of the study, the following suggestions can be put forth to minimize the structural, technological, productivity and profitability gap in general and between small and large farm categories in particular, thereby improving the productivity of both farm categories:

* The distribution of land resource is skewed. This is evident from the fact that about 40 per cent of total farmland is in the control of seven per cent of the farmers. In addition, large farmers have easier access to resources like water, and credit. Small farmers suffer from resource starvation.

Even within the small farmer category, there is a case for improving the conditions of the poorest of the poor i.e. those that own one hectare or less. Approximately 60 per cent of all farmers fall into this category.

Although land reforms have taken place in the last 50 years, they did not bring any significant changes in the land holdings. Therefore, more emphasis should be made to facilitate easy access of the majority of small farmers to the land, water and other essential agriculture inputs. This will help in the overall agriculture growth.

* As small farmers are more efficient in their operations, it is imperative that this group must be provided basic infrastructure in terms of education, health and sanitation and it should be ensured that their requirements are fulfilled on priority basis.

* Use of capital inputs is mainly concentrated on large farms but it is recommended that the small resource-poor and capital deficient farmers should be able to avail agricultural credit and other benefits without any restriction and hassles so that they are able to meet capital requirements. Similarly, the large farmers may be directed and trained to use their capital inputs more judicially and more economically so that their marginal product is increased.

* Use of family labour is more common in small farm category. The household labour can be utilized in a better way by imparting resource development skills to them and additional labour can be used in its best alternative use. It will lead to enhanced labour productivity and it can prove beneficial for overall economic development.

* Skill development and capacity building are important factors for equity. Well-trained farmers will have more confidence for undertaking farming enterprises, which would help in their economic uplift. Efforts have to be made to develop capacity of the farmers (both male and female) for undertaking small and large businesses and enterprises.

* The productivity of tube-well-irrigated area was found lesser than that of canal-irrigated area mediating some problems linked with tube-well-irrigated area. There could be the presence of salts in the underground water or even it may be unfit for irrigation and the presence of hardpan underneath the top soil. This issue must be addressed properly.

Farmers are required to use cultural and technological practices ranging from green manure to gypsum application. The underground water must be got tested before installation of tube-well.

* The provision of an effective rural infrastructure, particularly rural roads, electricity, drinking water, and educational and health facilities is one of the most important instruments. Good rural infrastructure and adequate institutional capacity are essential for the transition from a resource- based to a technology-based agriculture. Hence, investment in these areas should be part of the core elements of government strategy for sustainable development, food security and poverty alleviation.

* There is also a need to give vocational training to both farmers, workers in small-scale rural enterprises and traders and entrepreneurs and to strengthen the agricultural colleges and universities in their efforts to produce better research and extension manpower.

* A thorough revamp in terms of focus, mandate, management and manpower planning and development is needed for research system. Research on high value crops, livestock, fisheries, forest conservation, post-harvest handling, irrigation water management and management of soils problems need to be given much higher priority.

The provincial extension services also need overhauling. It should give more emphasis to technology demonstration and the use of broadcast media to spread its messages. It needs further focus on middle and small farmers using group participatory approach and to strengthen its linkages with the research institutes.

* Inappropriate fertilizer and pesticide use, inadequate availability of quality seed, inadequate markets infrastructure and non-availability of adequate farm power are some other problems that can be addressed through integrated efforts on the part of government agencies, agriculture research organizations and the farming community.