Small farms. Empirical evidence gen

Small farms. Empirical evidence generally suggests that small farms achieve higher land productivity and employment than large farms. Smallholders can achieve this high productivity for two reasons. First, smallholders’ productivity advantage stems from their widespread use of highly motivated family labor and the ability of family farmers to carefully supervise hired labor. Large farms, in contrast, typically face lower borrowing costs and hence are better able to finance equipment and inputs. As a result, smallholder farms generally dominate in early stages of development in locations where equipment is expensive and land scarce. Large farms, in contrast, perform better in later developing countries with high labor costs and surplus land.