Smallholding

A smallholding or smallholder is a small farm operating under a small-scale agriculture model.^[2] Definitions vary widely for what constitutes a smallholder or small-scale farm, including factors such as size, food production technique or technology, involvement of family in labor and economic impact.^[3] Smallholder farms are often defined as those operating on less than two hectares of land.^[4]

The Food and Agriculture Organization of the United Nations (FAO) estimates that there are roughly 500 million smallholder farms – those covering less than two hectares – which account for about 85 percent of all farms globally but manage only around 9 percent of the world’s agricultural land.^[4]

Smallholdings are usually farms managed by a single family, combining cash crops with subsistence farming.^[5] Despite facing persistent constraints including limited access to land, credit, inputs, technology and markets, smallholders continue to make remarkable contributions to global food supply and rural livelihoods.^[6] They tend to cultivate a wider diversity of crops and non-crops, much of which is consumed directly as food, thereby supporting agrobiodiversity, rural employment, and climate resilience. By boosting local food production, smallholdings can also reduce developing countries’ dependence on imported food.

As a country becomes more affluent, smallholdings may not be self-sufficient. Still, they may be valued for providing supplemental sustenance, recreation, and general rural lifestyle appreciation (often as hobby farms).

Small-scale agriculture is often in tension with industrial agriculture, which finds efficiencies by increasing outputs, monoculture, consolidating land under big agricultural operations, and economies of scale. In some cases, certain labor-intensive cash crops, such as cocoa production in Ghana or Côte d'Ivoire, rely heavily on smallholders; globally, as of 2008, 90% of cocoa is grown by smallholders.^[7] These farmers rely on cocoa for up to 60 to 90 per cent of their income.^[8] Similar trends in supply chains exist in other crops like coffee, palm oil, and bananas.^[9]

Smallholding farms frequently require less industrial inputs and can be an important way to improve food security and sustainable food systems in less-developed contexts. Improving the productivity and financial sustainability of smallholders is an international development priority and is measured by indicator 2.3 of Sustainable Development Goal 2.^[10][3]

Smallholder farms encompass a diverse array of agricultural operations, varying from those owning the land they cultivate to those who do not.^[11] Smallholders typically rely on family labor, occasionally hiring labor, particularly during peak seasons.^[12] Women contribute a substantial portion of farm labor and household support, including crop production, fuel and water collection, and small-scale trading activities.^[12] The productivity per area tends to increase with higher involvement of family members in farm activities.^[12]

Many smallholder farms supplement their income through off-farm work, crucial for sustaining livelihoods, particularly during agricultural downturns like droughts.^[12] Engaging in off-farm employment also serves to build social capital and resilience within these communities.^[12] Having multiple sources of income or employment opportunities off the farm contributes to the economic stability of smallholder farming households. These off-farm income-generating activities offer a buffer against agricultural shocks and allow for a diversified livelihood strategy, providing families with increased financial security and access to essential resources.

The definition of a small farm has varied over time and by country. Agricultural economists have analyzed the distinctions among farm sizes since the field's inception.^[13]

While most smallholdings worldwide are family-operated small farms, several region-specific or purpose-specific forms also exist:

According to conventional theory, economies of scale allow agricultural productivity, in terms of inputs versus outputs, to rise as the size of the farm rises. Specialization has also been a major factor in increasing agricultural productivity, for example as commodity processing began to move off the farm in the 19th century, farmers could spend more effort on primary food production.^[17]

Conventional wisdom of economies of scale was challenged by the inverse relationship between farm size and land productivity—where smaller farms appear more productive—and was regarded as a stylized fact in development economics since Amartya Sen in 1962.^{[18][19][20][21]} Recent research, however, shows this pattern is context-specific and often disappears when broader measures such as total factor productivity rather than only yields are used or when medium and large farms are included.^[22][23] Findings from a meta-analysis show that after accounting for market imperfections, measurement errors, and methodological issues, no systematic productivity differences remain across scales.^[24] FAO notes that this body of evidence indicates that, with equal access to resources, smallholders could achieve the productivity levels of larger farms; however, many remain constrained by market and institutional barriers, resulting in significant yield gaps.^[25]

Farm size shapes many aspects of agricultural systems, including access to technology, capital, and markets.^[25] Larger farms often benefit from economies of scale, enabling investment in advanced machinery, irrigation, and digital tools that can raise productivity, but sometimes at environmental cost through land degradation or input intensification. Smaller farms, on the other hand, tend to diversify production and allocate labor more intensively, which can support agrobiodiversity, food security, and rural employment, particularly in low-income countries.

Although numerous studies show that larger farms are more productive than smaller ones,^[26] some writers state that whilst conventional farming creates a high output per worker, some small-scale, sustainable, polyculture farmers can produce more food per acre of land.^[27]

Small farms may also generate broader economic benefits. Farmers often support the local economy of their communities. An American study showed that small farms with incomes of $100,000 or less spend almost 95 percent of their farm-related expenses within their local communities. The same study took into comparison the fact that farms with incomes greater than $900,000 spend less than 20 percent of their farm-related expenses in the local economy.^[28]

Small-scale agriculture may also sell products directly to consumers. Disintermediation gives the farmer the profit that would otherwise go to the wholesaler, the distributor, and the supermarket. About two-thirds of the revenue is expended on product marketing.^{[citation needed]} If farmers sell their products directly to consumers, they receive a higher percentage of the retail price, although they will spend more time selling the same amounts of product, which is an opportunity cost.

Some companies attempt to include smallholdings into their value chain, providing seeds, feed, or fertilizers to improve production.^[29] At the same time, as the sustainable food and local food movements grow in affluent countries, some of these smallholdings are gaining increased economic viability in the developed world as well.

Smallholder farmers play a central role in global food security despite facing significant investment constraints.^[30] Recognizing this importance, Goal 2 of the United Nations Sustainable Development Goals aims to end hunger and achieve food security through sustainable agriculture. Target 2.3 specifically calls for doubling the agricultural productivity and incomes of small-scale food producers – including women, Indigenous peoples, family farmers, pastoralists, and fishers – by 2030.^[31] Strengthening the capacity and sustainability of smallholders is therefore considered critical to achieving global food security and rural poverty reduction.

The International Fund for Agricultural Development has an ongoing program for Adaptation for Smallholder Agriculture.^[32] Increased food system investment in smallholders can improve food security.^[33]

During the global COVID-19 pandemic, and the attendant disruptions of food systems, their role has become more important.^[34]

While the historical focus on smallholders has been increasing global food supply under climate change and the role played by smallholder communities, climate adaptation efforts are still hindered by lack of information on how smallholder farmers are experiencing and responding to climate change. There is lack of detailed, context-specific information on what climate change portends to smallholder farmers in different and widely varying agroecological environments and socio-economic realities, and what management strategies they are employing to deal with these impacts.^[35][36]

Especially for smallholders working in commodity crops, climate change introduces an increasing amount of variability to farmer economic viability; for example, coffee production globally is under increased threat, and smallholders in East Africa, such as in the Ugandan, Tanzanian or Kenyan industries, are rapidly losing both viable coffee land and productivity of plants.^[37]

In some cases, smallholders can contribute to deforestation. For example, smallholders are an important component of the oil palm industry of Southeast Asia, contributing 40% of the production. Because they often have limited access to credit and financial support, smallholders may be less able to invest in measures to increase productivity when yields decline, increasing their need to clear more land.^[38] Increasing productivity, especially amongst smallholder farms, is an important way to decrease the amount of land needed for farming and slow environmental degradation through processes like deforestation.^[39][38]

The global agricultural landscape is characterized by a wide disparity in farm sizes and the distribution of farmland. Recent estimates suggest there are about 570 million farms worldwide, the majority of which are smallholdings. Farms smaller than 2 hectares account for roughly 85 percent of all farms but operate only around 9 percent of global farmland. By contrast, farms larger than 50 hectares make up less than 1 percent of all holdings yet manage about three-quarters of the world’s agricultural land.^[4]

Globally, farms under 2 hectares contribute an estimated 30 percent of total crop production and about one-third of food supply. They produce a large share of stimulant, spice, and horticultural crops, while larger farms dominate the output of cereals, oilseeds, and sugar crops that underpin international trade. Together, farms of all sizes form complementary components of agrifood systems – smallholders supporting local food diversity and livelihoods, and large farms sustaining bulk commodity flows and global food markets.^[40]

Regional differences are pronounced. In Asia and sub-Saharan Africa, smallholders dominate numerically, though farms between 2 and 50 hectares cultivate about half of the agricultural area. In Europe, Central Asia, Latin America and the Caribbean, North America and Oceania, large-scale holdings exceeding 1 000 hectares account very large shares of farmland, and almost and almost all agricultural land is operated on farms larger than 50 hectares.^[4]

The prevalence and land share of smallholdings vary significantly across income groups. In low-income countries, smallholder farms make up around three-quarters of all farms and operate just over one-quarter of total agricultural land. Their share increases to 85–90 percent of farms in lower- and upper-middle-income countries, managing about 40 percent and 7 percent of farmland, respectively. In high-income countries, smallholdings account for roughly one-third of farms but operate only a minimal fraction of agricultural land. Conversely, large farms exceeding 50 hectares are relatively rare in low-income regions yet dominate farmland use in upper-middle- and high-income countries, where they control over 80 percent and 90 percent of agricultural land, respectively. Overall, farmland is more concentrated among large farms in wealthier countries, while smallholdings remain most prevalent in lower-income regions.^[40]

In low-income countries, women make up 43 percent of smallholding agricultural labor but produce 60–80 percent of food crops.^{[citation needed]}

In many developing countries, smallholding is a small plot of land with low rental value, used to grow crops.^[41] These farms vary in land sizes, production and labor intensities.^[42] The distribution of farm sizes depends on a number of agroecological and demographic conditions, as well as on economic and technological factors.^[43] Smallholders are critical to local and regional food systems, as well as livelihoods, and especially so during periods of food supply chain disruptions.^[44] Smallholders dominate production in certain key sectors such as coffee and cocoa. Various types of agribusinesses enterprises work with smallholding farmers in a range of roles including buying crops, providing seed, and acting as financial institutions.^[45]

Of the estimated 571 million farms globally, India hosts around 30 percent.^[4]

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In India, there are five size classifications for smallholders. These are 'marginal' less than 1 hectare (2+1⁄2 acres), 'small' between 1 and 2 hectares (2+1⁄2 and 5 acres), 'semi medium' between 2 and 4 hectares (5 and 10 acres), 'medium' between 4 and 10 hectares (9.9 and 24.7 acres), 'large' above 10 hectares (25 acres). If we use 4 hectares (10 acres) (marginal + small + medium) as a threshold, 94.3% of holdings are small and these constitute 65.2% of all farmland.^[46] The bulk of India's hungry and poor people are constituted of smallholder farmers and landless people. 78% of the country's farmers own less than 2 hectares (5 acres), which constitutes 33% of total farmland but at the same time, they produce 41% of the country's food grains. 20% of the world's poor live in India, although the country was self-sufficient in food production in 2002 due to the first Green Revolution started in the latter half of the twentieth century, numerous households lacked resources to purchase food. Holdings less than 2 have contributed 41% of total food grain production in 1991 compared to 28% in 1971, which means a substantial increase, whereas medium holdings registered a mere 3% increase in the same period and large holdings registered a decline from 51 to 35%. This signifies the importance of smallholders in the Green Revolution and the attainment of national food security. Smallholder families are becoming more vulnerable and more disadvantaged due to the expansion of international trade liberalisation. The needs and aspirations of small farmers must feature prominently in policies of market reform that seek to improve food and nutritional security. India's total increase rate of productivity across the farming sector was far less in 1990's when compared to previous decades.^[47]

Smallholder production accounts for 78 percent of total agricultural production and 70 percent of commercial production.^[48] Farm sizes average 0.47 hectares (11⁄4 acres),^[49] representing the vast majority of Kenya's rural poor population who depend on agriculture for their livelihood.^[50] Adverse risk events during the period 1980–2012 led to production losses in smallholder farms resulting in a drop in agricultural gross domestic product (GDP) of 2 percent or more.^[50] Increasing the productivity of smallholder farmers is encouraged due to its potential to improve food availability, increase rural incomes, lower poverty rates, and grow the economy.^[50] Diversification of crops in smallholder farms is one of the potential strategies in sustaining agricultural productivity, and copping with marketing risks.^[51] It is also a transitional step from subsistence to commercial agriculture.^{[citation needed]} Age, education of household head, type of crops, cropping system, amount of credit, and irrigation facilities are some of the factors influencing diversification in smallholder farms.^[52]

Along the upper and middle reaches of the Nduruma River in the Pangani River Basin, Tanzania, there is not enough water to go around. Smallholder farmers address inequities in land and water distribution by enforcing existing traditional local rules. Whilst larger estate farms may have governmental licences guaranteeing rights to the water, a study found that those large-scale farms which adhere to the traditional water rights structures fare better in terms of social reputation, which better ensures their access to water. Adhering to the water law to enforce their permits is less effective, as regional Tanzanian local governments generally attempt to avoid conflict with their populace. On a larger scale, however, existing traditional rules are ineffective in maintaining cooperation among users along the Nduruma River.^[53]

In 1975, there were 4.2 million smallholder farming households in Thailand. In 2013, Thailand had 5.9 million smallholder farming households. The average area of these smallholdings had shrunk from 3.7 to 3.2 hectares (9+1⁄4 to 8 acres) over that period. Instead of farms getting larger and less numerous, as has been the case in the Global North, the reverse happened: they got smaller and more numerous.^[54]

Several definitions of small farm have been formulated in legislation. In 1977 the US Congress, via the Food and Agriculture Act of 1977, defined a small farm as one with sales under $20,000.^[55] At the time these comprised 70% of farms in the US.^[13] The Act sponsored additional research on small farming operations by US land grant universities and their extension services and mandated that an annual report on these activities be issued by the US Secretary of Agriculture.^[13] A 1997 study by the United States Small Farms Commission defined small farms as those with less than $250,000 in gross receipts annually on which day-to-day labor and management are provided by the farmer and/or the farm family that owns the production, or owns or leases the productive assets. In 2000, such farms accounted for about 90% of the more than 2.1 million U.S. farms, but only about 40% of U.S. farm production.

The concentration of production on fewer and larger operations is a longstanding concern among some segments of the agricultural community. Others view these changes as inevitable, and even necessary to maintain the efficiency and competitiveness of the sector.

Farm typology analysis by the USDA Economic Research Service divides the small family farm category into five groups:

1. limited-resource farms;
2. retirement farms;
3. residential/lifestyle farms;
4. farming occupation/lower-sales,
5. farming occupation/high-sales.

Many farmers are upset by their inability to fix the new types of high-tech farm equipment.^[56] This is due mostly to companies using intellectual property law to prevent farmers from having the legal right to fix their equipment (or gain access to the information to allow them to do it).^[57] This has encouraged groups such as Open Source Ecology and Farm Hack to begin to make open-source agricultural machinery.

The debate concerning the role of small farms within the European Union is ongoing. The European Commission states that more than three-quarters of farm holdings in the European Union are less than 10 hectares (25 acres), with a large number less than five hectares (12 acres).^[58] However as of 2009^[update] it had not established a formal definition of the term that could be used in its Common Agricultural Policy. The public perception of the possible benefits of small-scale farming has led to requests for further studies from the European Commission.^[59]

• Thomas, Frieder; Schmidt, Götz (2006). Förderung von Existenzgründungen in der Landwirtschaft: ein Projekt im Auftrag des BMELV (03HS016): Projektbericht. Münster-Hiltrup: Landwirtschaftsverlag. ISBN 3-7843-0513-X.

 This article incorporates public domain material from Jasper Womach. Report for Congress: Agriculture: A Glossary of Terms, Programs, and Laws, 2005 Edition (PDF). Congressional Research Service.

• Graham, Peter Anderson (1911). "Allotments and Small Holdings" . In Chisholm, Hugh (ed.). Encyclopædia Britannica. Vol. 1 (11th ed.). Cambridge University Press. pp. 699–704. This provides an extensive historical and global view as of the early 20th century.