Acreage as a measure of farm size has not found acceptance in all quarters and attempts have been made to translate farm size into a dynamic concept by introducing the notion of "economic holding".^ An economic holding is one which under existing local conditions and
techniques of production affords the cultivator a reasonable standard of living. It is also one which offers full employment to a family of normal size and a pair of bullocks. The definition resembles broadly that of the Agrarian Reforms Committee. 5 The definition of economic holding is part of the evolution of national policy on land reforms as stated in the First
1 The regions covered by the M S are homogeneous ones. Even so differences in fertility of land within regions have been taken into account by classifying farms according to whether they are fully or partially irrigated or unirrigated.
2 Radhakrishna,D, 'Shares of Fixed Factors in Net Earnings from Agriculture in West Godavary-Andhra Pradesh,' Artha Vigyan. IV, 1, March 1 1962, pp 93-94*
5 Rao,G.H.H. 'Optimum Farm and Optimum Firm - A Comment, ' Economic Weekly.
XIV, 44 & 45, Nov. 10 1962, pp 1735-1756.
4 Krishna,R. 'The Optimum Farm and the Optimum Firm - I,1 Economic Weekly.
XIV,40, Oct. 6 1962, pp 1577-1581; also Krishna,!. 'The Optimum Farm and Optimum Firm - II,' Economic Weekly, XIV,41, Oct. 13 1962, pp 1629-1633, One of the alternative criteria suggested by the author is based on the value added by farms; see also Ramesh,D, 'Measurement of Size of Farm and Efficiency - Some Alternative Approaches,' IJAE, XXIII, 1, Jan, - Mar.
1968, pp 65-66.
5 All-India Congress Committee, Report of the Agrarian Refonns Committee.
New Delhi, 1951 (Second Edition), p 8.
55
Five Year Plan. The need for a definition arises both for the purpose of devising policies to eliminate uneconomic farms and for prescribing ceilings on land holdings*'1'
Since the publication of Farm Management Surveys for the various states, the data they provide have been used to define economic holdings*
Mehra defines an economic holding as one where the farm income is2
sufficient to meet consumption expenditure of the family engaged in agri-culture and the material costs of production. 3 By far the best attempt at refining the concept of economic holding was made by Khusro in his analysis of agricultural land in India in relation to size of holdings and land tenure.^
1 For a summary of national policy on land reform that is relevant to thq. delimitation of farm size see, Government of India, Ministry of Agriculture, Department of Agriculture, Ceiling on land Holdings.
New Delhi, 1972, Chapter I, pp 1-9? Government of India, Planning Commission, First Five Year Plan* New Delhi, I960, pp 189-193?
Reports of the Committees of the Panel on Land Reforms* New Delhi, 1958, pp 100-103* For the most recent attempts at fixing land ceilings and the usual scuttling of land reforms see, Anon,
'Land Ceiling Talked Out,' EPW* VII,20, May 13, 1972, p 963?
Anon, '18 acres is too high,1 EPW, VI,19, May 6, 1972, p 908*
2 Mehra,D.S. 'Economic Holding Concept and Measurement,' EPW, IV,38, Sept. 1969, PP 1523-1529*
3 In so far as all of the income may not be derived from crop
production, this definition leaves the source of income indefinite, 4 Khusro,A,M, An Analysis of Agricultural Land in India, by Size of
Holding and Tenure, op.cit*. see also Khusro,A.M, 'Farm Size and Land Tenure in India,' Indian Economic Review* IV,2, (New Series), Oct. 1969, PP 123-145*
5Zf Khusro develops the concept of minimum size of holdings* It is a size which fulfils the three following norms* the minimum plough unit, the minimum work unit and the minimum income unit.^ The units here relate to size of farms which in the first case gives adequate employment to a pair of bullocks5 in the second case it provides sufficient employment to family labour and in the third case provides an income sufficient to maintain the farm family at a reasonable standard of living. The minimum size of farm defined by all these three criteria relates to average crop and soil
conditions and techniques of production as they existed in the mid-fifties.
The minimum size of farm so defined in the case of Andhra Pradesh and All- India was calculated by Khusro on the basis of Kami Management data and this is presented in the Table below*
Table 1*8. Minimum Size of Holding according to Plough,Unit, Work Unit and Income Unit for Andhra Pradesh and All-India, in the mid-fifties,
( in acres )
Nature of Unit Andhra Pradesh All-India
Plough Unit 10 - 15 7.5
Work Unit 5 - 7.5 7.5
Income Unit 10 15
Source* Khusro,A,M, An Analysis of Agircultural Land in India by Size of Holding and Land Tenure, op.cit., pp 22,52 & 58.
1 Khusro,A.M* An Analysis of Agricultural Land in India by Size of Holding and Land Tenure, op.cit., pp 15-59*
55
If a certain size fails to fulfil these three criteria then it can be regarded as being inefficient in the sense of not producing at the minimum point on the long run average cost curve* On the basis of the evidence in the Farm Management data, Khusro regards a farm of five acres as the dividing line between efficient and inefficient f a r m s K h u s r o then goes on to
elaborate on the tenurial aspects of farm size. We sha,ll have occasion to expand on this in connection with our discussion of tenurial disincentives faced by small farms. 2 In passing however, it is worth noting that Khusro for the first time makes extensive use of Farm Management data to arrive at a rigorous definition of farm size and by helping to tidy up our notions regarding farm size and tenurial characteristics, provides a frame-work fox' introducing dynamic considerations in the definition of minimum size of farms. He refers to these himself; they are general economic development, changes in consumption on farms and changes in techniques of production.3
Significant as attempts like those of Khusro have been in developing the notion of economic holding, the analysis of farm efficiency in Indian agriculture has revolved around the static measure of farm size.
This measure has been used to highlight "an aspect of Indian agriculture", namely, the inverse relationship between farm size and productivity and the direct relationship between farm size and farm business income. These relationships have been explained in many ways.^
1 Khusro,A.M. An Analysis of Agricultural Land in India by Size of Holding and Land Tenure, op.cit., p 46.
2 Refer Chapter V.
3 Ibid., pp 39-45*
4 For a summary of these explanations see Bhagawati,J.H. & Chakravarty,S, 1 Contributions to Indian Economic Analysis,1 American Economic Review.
LIX, 4> Part II, Sept. 1969, PP 2-73 especially pp 41-42*
56
Sen explains the inverse relationship in terms of the co
existence of small farms based on family labour and large farms which depend upon hired labour# 1 The higher labour input per acre on small farms is due to the liberal application of family labour for Sen assumes the opportunity cost of family labour to be zero. He contrasts this with large farms where the hired labour input is applied only to the point where the marginal product equals the market wage rate. 2 A similar reasoning is presented by
Mazumdar who argues that the supply price of labour on large farms is higher than the ruling wage rate and therefore, per acre, labour input on large farms is smaller than that on small farms where the supply price of labour is lower. 3 Conceptually, both Sen's and Mazumdar's arguments run into difficulties, the first by his assumption that family labour cannot find alternative employment, the second in assuming that the production functions of all farms are similar.^ Empirically, however, Mazumdar' s arguments are more tenable than Sen's. Mazumdar bases his argument on the observation
1 Sen,A.K. 'An Aspect of Indian Agriculture,' The Economic Weekly. XIV, 4,5 & 6, Annual Humber, Feb. 1962, p 243-246; • 1 Size of Holding and Productivity,' The Economic Weekly, XVI, 5*6 & 7 (Annual Humber) February 1964, p 323-326.
2 We can find a parallel here between Sen's explanation and Chaynov's theory of the peasant economy. According to Chaynov, the intensity of effort is determined by the subsistence needs and the subjective ..distaste for manual labour. As long as the needs of the family are not met, labour will be applied even when there is decreasing returns to the labour input;
Chaynov,A .V . The Theory of Peasant Economy. Edited by Thorner,P.,
Kerblay,B. and Smith,R.E.F,, The American Economic Translation Series, 1966, pp 70-87
3 Mazumdar,P. 'On the Economics of the Relative Efficiency of Small Farmers,' The Economic Weekly, Special Humber, July 1963* P 1259-1263*
Mazumdar,P. 'Size of Farm and Producticity - A Problem of Indian Peasant Agriculture,' Economica. H.S. XXII, 126, May 1965, p 161-173* especially p 166.
4 For an elaboration of these difficulties, see Bhagwati,J.H. &
Chakravarty,S. 'Contribution to Indian Economic Analysis,' op.cit., p 41*
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