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.