An inverse relationship between farm size and output per unit area is a recurrent feature in data from South Asia, apparently related to land-labor interactions. Although small farms seem to be more efficient than large ones, small farmers have trouble raising their profitability and enlarging their holding, largely because of credit constraints but also because of poverty and policy that discriminates against them. Misguided land reform in the past has made tenancy unattractive to landowners, so large capital-intensive farms have developed. Political economic analysis is needed to explain the failure of past land reform, as well as distortions in agricultural input and output markets in South Asia. Those losses have not been quantified and the reasons fragmentation persists are poorly understood.
Transaction costs are a significant impediment to functioning land markets.
In South Asia, transfers of land rights are complicated by lack of explicit title to land, and by informal and customary rights. Research needs include more systematic regional comparisons, the use of more panel data, and an investigation of how agricultural productivity is affected by gender problems and land fragmentation. The full report is available in PDF format.