The farm size - productivity issue

The debate on the pros and cons of land reform led to a revival of the old debate on the relation of farm size to productivity. Following W.W.II, the opinion was that small holdings yielded higher productivity, while the larger the farm, the lower the physical output and labour use. During that time when traditional technology was employed by landlords, large farms and smallholders alike - with only a few exceptions - this assumption corresponded to the empirical findings.

The increase in technological changes in agriculture and commercial farming, however, changed this picture. Using the same technology as on the large farms, the small farms were more productive because of greater labour input, whereas when progressive and commercial farmers employed a higher level of technology, the smallholders could not compete. In particular, the rapid sequence of new technological inputs required investments beyond the capacity of the small farmers and were also inaccessible to them.

Today, the middle-sized farms frequently turn out the highest productivity, while small farms are increasingly unable to provide the cultivators' families with a decent living. With shrinking size due to inheritance, the farmers look more and more for additional income. Those who are successful in this endeavor frequently lose interest in cultivation in the course of time.

Part of this change is due to a shift in the attitude of large landowners. Inheritance (sometimes also land reforms) reduced the size of their property and in order to maintain their standard, many landlords (or their sons) took up more intensive commercial farming instead of extensive cultivation with tenants. It is true that one can still find traditional landlords with all the consequences of this system, but an increasing number does what the government has asked them to do: increase the production of food to satisfy the needs of the urban population. As a result, one important argument for land reform ceased to exist.