Smallholding

A smallholding is a small farm operating under a small-scale agriculture model and managed by a smallholder. Definitions vary widely for what constitutes a smallholder or small-scale farm, including factors such as size, food production technique or technology, involvement of family in labor and economic impact. There are an estimated 500 million smallholder farms in developing countries of the world alone, supporting almost two billion people. Smallholdings are usually farms supporting a single family with a mixture of cash crops and subsistence farming. As a country becomes more affluent, smallholdings may not be self-sufficient. Still, they may be valued for providing supplemental sustenance, recreation, and general rural lifestyle appreciation (often as hobby farms). As the sustainable food and local food movements grow in affluent countries, some of these smallholdings are gaining increased economic viability in the developed world as well. 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.

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