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Smallholding

Small farm, often for a single family

  • 12 min read
  • 5 chapters
  • 1 lab on Lably

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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. 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. These farmers rely on cocoa for up to 60 to 90 per cent of their income. Similar trends in supply chains exist in other crops like coffee, palm oil, and bananas. In other markets, small scale agriculture can increase food system investment in small holders improving food security. Today, some companies attempt to include smallholdings into their value chain, providing seeds, feed, or fertilizers to improve production.

Because 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, addressing the productivity and financial sustainability of smallholders is an international development priority and is measured by indicator 2.3 of Sustainable Development Goal 2. Additionally, since agriculture has such large impacts on climate change, Project Drawdown described "Sustainable Intensification for Smallholders" as an important method for climate change mitigation.

Farm size vary widely by region. In 2025 Latin America and the Caribbean had only 3% of farms because holdings are generally large; in Asia and Africa, smallhold farms of 2 to 50 ha worked around half the farmland; and in Europe, the Americas and Oceania, farms exceeding 1 000 ha controlled the greater part of farmland.

The crops produced by small-hold farmers contributed in 2025 approximately 16% of global dietary energy, 12% of proteins, and 9% of fats derived from crops. Their contribution was significant for certain crop types: farms smaller than 5 ha produce almost 50% of global stimulants, spices and aromatic crops, while contributing between 20% – 30% of cereals, fruits and vegetables.

Issues

Productivity

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.

Although numerous studies show that larger farms are more productive than smaller ones, 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.

Small farms have some economic advantages. Farmers 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.

Small-scale agriculture often sells 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. 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.

Food security

Because smallholding farms frequently require less industrial inputs and can be an important way to improve food security in less-developed contexts, addressing the productivity and financial sustainability of small holders is an international development priority and measured by indicator 2.3 of Sustainable Development Goal 2. The International Fund for Agricultural Development has an ongoing program for Adaptation for Smallholder Agriculture.

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

Environmental and climate adaptation

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.

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.

In some cases, smallholders are an important source of deforestation. For example, smallholders are an important component of the oil palm industry of Southeast Asia, contributing 40% of the production. Because such farmers are less able to access financing than larger businesses, they are unable to fund methods to increase the productivity of their farms when yields decline, increasing their need to clear more land. 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.

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