Despite the achievements of smallholders in Asia during the green revolution, there is scepticism that Africa’s smallholders, who dominate the farm area in most countries, can imitate this model and deliver agricultural growth. This paper assesses whether such pessimism is justified.
Given the high transactions costs of hiring labour of farms, diseconomies of scale can be expected when labour is relatively cheap and abundant compared to other factors of production: which may explain the survey evidence that small farms often produce more per hectare than larger farms. In conditions of low development with relatively cheap labour, small units may have advantages over larger ones.