Analysing data from 1975 to 2014, a study examining changes through three waves over 40 years by researchers at IIT Bombay and the University of Hyderabad found that productivity in India's semi-arid tropics depends less on farm size and more on access to inputs, credit, and markets.

In agriculture, bigger hasn’t always meant better. Studies since the 1960s have shown that smaller farms are generally more productive than large farms in terms of yield per acre. This trend ran contrary to the industrial logic and puzzled researchers and policymakers. Globally, as smallholders and family farms hold nearly 90% of the agricultural land, this trend has been influencing both policies and investments in agriculture for decades.

Now, a new study by researchers at the Indian Institute of Technology Bombay (IIT Bombay) and the University of Hyderabad adds fresh nuance and a few twists to this age-old puzzle. The findings suggest that the inverse farm size-productivity relationship, where the productivity decreases as the farm size increases, was never as pronounced in the semi-arid regions of India. As agrarian distress dragged on in these regions, the productivity advantage of small farms had faded in the later years (2009-2014).

“The relationship between farm size and farm productivity in the developing world has been debated for several decades. What our findings show is that smallholders still matter greatly for food security and rural stability, but they are increasingly vulnerable due to monocropping and high input costs. We believe that the way forward is to strengthen the capacity of smallholders by improving their access to appropriate technologies, affordable credit, and reliable extension services,” says Prof. Sarthak Gaurav from Shailesh J. Mehta School of Management, IIT Bombay and a coauthor of the study.

For the study, researchers relied on village-level studies from the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) datasets spanning over four decades from 1975 to 2014. This extensive database is considered one of the world's longest-running agricultural panel studies from semi-arid tropics, as it tracks farming households across multiple decades. Despite the availability of rich panel data on villages in India’s semi-arid tropics, researchers found that the understanding of the long-term dynamics of farm size and productivity was lacking.

Most non-coastal parts of peninsular India fall in the semi-arid tropics, a region that missed out on the early benefits of the Green Revolution. It is a region where farming depends heavily on erratic rains that typically range between 400 and 800 millimetres annually. While this belt spans multiple states, the ICRISAT data is mainly from three representative zones: Akola, Solapur, and Mahabubnagar. The researchers explain that the unique agroecological and institutional conditions here make it an ideal setting to understand how productivity patterns changed in response to delayed but significant transitions in agriculture.

The new research is possibly the first study on the dynamics of the farm size and productivity in India’s semi-arid tropics. The researchers faced their fair share of challenges analysing the vast ICRISAT datasets. Since the data was collected in different phases, they had to spend months merging household and cultivation data across survey waves. Given the long time frame, data inconsistencies necessitated adjustments to the methodology, including a shift from plot to household-level analysis. The study also relied on external sources, such as the India Meteorology Department’s (IMD) gridded data, to fill the gaps.

The researchers found that small farms were indeed more productive, especially in the early years (1975–84). Earlier studies have offered various explanations for this inverse relationship between farm size and productivity. The most common explanation was that smallholder farmers tend to put in far more intensive family labour, give higher attention, and add more fertilisers per unit compared to larger landholders. However, the new study proves that even during those early years, the productivity scale was not as tilted towards small farms as previously thought.

The inverse advantage of small farms was, in fact, statistically insignificant once the team controlled for the amount of labour and fertiliser that went into each plot. “Both labour and non-labour inputs, such as seeds, fertilisers, and machinery, had a strong positive association with land productivity. This suggests that what matters is not just the size of the land but how effectively that land is cultivated,” explains Prof. Gaurav.

But, there’s a catch. While input intensity boosts gross productivity, it doesn't necessarily improve profitability. Therefore, even though smallholder farmers may have seen higher yields per acre, the needle on profit per acre may not have moved either way. Furthermore, for small farmers, crop diversification often acts as an insurance against weather shocks and market volatility. But the study shows that it actually reduces both productivity and technical efficiency. These results challenge the long-held assumption that small farms are more productive, highlighting why they continue to struggle financially.

Another important result from the study is that the inverse pattern has weakened in recent years, but not fully reversed, despite extensive mechanisation. “We expected that with rising farm mechanisation and better access to markets, the relationship might turn positive by the later years. But even by 2014, the relationship had only shifted to an insignificant positive and had not fully flipped. That persistence tells us something important about how uneven or slow structural change can be in regions like the semi-arid tropics,” emphasises Prof. Gaurav.

In a country where small farmers with less than two hectares comprise nearly half of the nation’s farming population, the new study’s findings have far-reaching implications in several aspects, including food security, poverty alleviation, sustainability, agriculture policies, and land reforms in the agricultural sector. Among multiple policy insights, Prof. Gaurav recommends prioritising improvements in smallholders' collective capacity to access markets and inputs. “Many of the challenges we observed were not just about farm size but about weak linkages to input and output markets, and limited access to knowledge or infrastructure. Helping smallholders organise into collectives or producer groups can enable them to pool resources, adopt agroecological practices, and negotiate better prices,” explains Prof. Gaurav.

The study has its limitations, from its reliance on self-reported data from farmers to a limited focus on one particular agroecological zone. However, the findings prove that the farm size-productivity relationship is complex, context-dependent, and much weaker than previously thought. This doesn't mean small farmers are losing their edge, but underscores the crucial support they need to adapt. The challenge lies in preserving the benefits of small farms, such as employment generation and food security, while enhancing their economic viability.

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