Normally it is said that as the size
of the farm increases, the per acre yield of the farm decreases. It means that
the small farms are more efficient than the large farms. In this respect,
following arguments are given:
(i) When the cultivation on large farms is made, the production is carried
till the level that marginal output becomes equal to wages. While on small farms
the output is produced under family farming where output is carried to the
situation where marginal output of the last labor is zero. Thus, on the basis of
per acre productivity the small farms are more efficient.
(ii) Large farms are less fertile because small farmers sell their inferior
lands to big farmers during the days of distress.
(iii) The large farms are scattered at different places, rather being
concentrated at one place. If the distress hypothesis is considered correct that
poor farmers sell their farms during poverty and famine, then the scattered
farms are furnished with inefficiency. Again , it has been found out that small
farmers utilize the small farms effectively because such farms are the only
source of their income, so they use their farm inputs in the best possible
manner. On the other hand, big farmers use their big farms ineffectively because
it is not necessary for them to use the inputs effectively. Again , their
marginal utility for lands has gone down.
(iv) The big farms are so often cultivated by the tenants, while the small
farms are cultivated by the owners themselves. The tenants and the agri. labor
have least interest for the lands of others. The small owners work more
diligently with their lands. As a result, their per acre yield is higher.
(v) The owners of big farms are either absentee landlords or those engaged in
politics. Therefore, they neither make proper supervision nor do innovations in
their products. As a result, their per acre yield remains lower.
(vi) The large farm holders follow the principle of
maximization of profits or
they produce such an amount where the difference between total revenue and the
total cost is maximum. Whereas the small farmers like to maximize their revenues
or output, rather profits. Thus, the above discussion reveals that the lands be
divided into smaller farms under land reforms.