tractors arc openl to dispute. it is generally rccognizcd that access to tubewell watcr raises productivity. Simall larmers may thus bc at a disadvantage. wvhich can be overcome if they can rent in cxpcnsive lumpy inputs or purchasc water on the open markct.

A more recent data set from (Maahmllood et al 1988) also reveals somre important diffcrcnces across classes of farmcrs. Farmers' education is an important influence on yield levels. controllinig f'or othcr f'actors. Education is also related to usc of commercial inputs (fertilizer and tractors). This suggests that more educated farmers have thce managerial skills necessary to use these inputs, or alternatively that they have the skills to gain access to these inputs. "incc commcrcial inputs have been subject to policy distortions in thl.past , even farmers Who Would have used the inputs equally productivcly may haxvc differential zbility to circumvent thc constraints to obtaining thcsc inputs..

Risk aversion could make small farmers less commercially oriented than large farmers but Rosenzxcig and Binswanger lound thiat this effecct only operated at very high levels of risk in semi-arid India.

T'lhc conclusioni to be drawvn is similar to that of Rosenzweig and Binswanger (1993): the lower supervision and labor costs arising from the use of family labor on small farms more than outweigh the scale, capital cost, and risk diffusion advantages of bigger and wealthicr farmers. H-lowever. somiec farms can be simiiply too small and resource-poor to be ei'ficient even if all institutional constraints wxere rcmoved. Evidence generally supports the view that the efficiency of'tlhc smallest. and presumably most marginial, farmers is low.

Tenancv: Tenancy can also have an important productivity impact. The length of the timc horizon lfor owvncrs and tenants is bound to differ, giving rise to differing attitudes towards long- tcrm invcstments (especially natural resource management investments), and crops with long gestation lags. Tlcsc effects arc likely to be particularly strong fo: Pakistan's sizable numliber of tcnants-at-will, who can be evicted at anry timc, cxcept during the cropping season. Insecurity of' tenurc also causes a bias towards the opening of new land (an unpriced resource), eVenI if suchl lanid is marginial land.

In addition, di'fferent types of tenancy may have differcnt incentive cffects. Since sharecroppers only reccive half of the additional output arising from extra effort, they may have wveakcr incentives thani fixed-rent tenants. In this regard, landlord supcrvision and cost-sharing can ovcrcome the disincentivc cffect of sharecropping. More generally, landlord supervision can overcome the probletm of differing timc-lhorizons between owner and tenant. Howevcr, supervision is a costly activity, and mayn not be undertaken at all by abscntce landlords.

In practice, tcnanit farming has been in steep decline in Pakistan since the 1960s. Bctwvcen 1 960 and 1980 tihe number ot'tenants declined from 2 million to 1I Imillion. Mahmood (1994) finds that this declinc continued througlh the 1980s, with an increasing tendcncy to selfcultivate anmongst larger l'armiiers. In addition to the decline of tenancy, thc composition of tcnants by contract type is a major issuc. Ovcr 90 perccnt of renltal area is share-cropped out rathcr tlhcen being at a i-ixel rental. A fixcd-relntal land market has failcd to cmerge in traditional

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