# **1. Introduction**

Worldwide, 475 million farms, constituting 84 percent of a total of 570 million farms, are estimated to be less than 2 hectares (Lowder et al., 2016), and (smallholder) agricultural activities constitute an integral part of livelihoods in rural areas that are home to nearly 70 percent of the population in low-income countries.<sup>2</sup> In Africa specifically, the average share of rural household income stemming from agriculture could be up to 69 percent (Davis et al., 2017), and research has consistently documented higher rates of expected poverty reduction associated with agricultural vis-à-vis nonagricultural growth (see Dorosh and Thurlow, 2016 and the studies cited therein).

The importance of agriculture for development is recognized in the formulation of the Sustainable Development Goal (SDG) Targets 2.3 and 2.4, which require doubling of agricultural productivity and incomes of small-scale food producers, and ensuring sustainable food production systems and implementing resilient agricultural practices that increase productivity and production. Both targets are associated with indicators<sup>3</sup> that rely on crop production and land area information sourced from household or farm surveys, and the documented effects of measurement on accurate measurement and analysis of land productivity underscore the need for high-quality survey data for cross-country monitoring, broader economic research, and policy formulation (Carletto et al., 2013, 2015; Kilic et al. 2017a; 2017b).

An often observed yet insufficiently explained puzzle in smallholder agriculture is that of the inverse relationship between scale (in terms of farm or plot size) and (land) productivity (henceforth referred to as the IR). The existence of the IR could have a direct bearing on policy formulation as it, for instance, relates to reforms targeting land and non-land input markets; land redistribution programs; and identification of beneficiary target universe for agricultural development programs. If the IR does indeed exist, and is not an artifact of measurement error in the data, that would suggest governments might encourage redistribution of land, favoring smaller allotments – even if the operational implications of such recommendation are not clear. Alternatively, the existence of the IR could simply temper concerns around plots becoming smaller or, more broadly, “small” plots, often managed by females and poorer farmers (Kilic et al., 2015a; 2015b).

The body of literature on the IR is rich, and yet inconclusive. In the African context, Larson et al. (2014) revisit the IR debate with a focus on maize, using data from a wide array of household and farm surveys conducted from 1999 to 2009 across the continent, and provide support to the existence of the IR both at farm- and plot-levels. Following Eastwood et al. (2010), it has been suggested that the IR may be explained by (i) lower supervision costs on smaller holdings and

> 2 The statistic is for 2016, the most recent year available through <u>http://data.worldbank.org.</u>

> 3 The final list of SDG indicators can be found in Inter-Agency and Expert Group on Sustainable Development Goal Indicators (2016).

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