“Small is beautiful.” The phrase, popularized by German-born British economist E. F. Schumacher in his 1973 book of the same name, reflects a philosophy that values small-scale, appropriate technologies and decentralized economies over large-scale industrialism. Schumacher argued that capitalism, while improving living standards, has eroded cultural values and degraded natural resources. He advocated for the conservation of resources and sustainable environmental practices, promoting what he termed “intermediate technology”—a middle path between traditional methods and advanced industrial systems. In 1965, Schumacher and other environmentalists established the Intermediate Technology Development Group in London to advance this idea.
Schumacher’s theory aligns closely with agriculture, particularly the idea that smaller farms can be more productive. Early studies in India between 1955 and 1957 revealed an “inverse relationship” between farm size and productivity—larger farms tended to produce less per unit of land. Nobel laureate Amartya Sen (1962, 1964) explained this by noting that smaller farms rely heavily on family labor, leading to more intensive cultivation and higher yields per acre.
However, the introduction of modern agricultural technologies shifted this pattern. Later research indicated a “positive relationship” between farm size and productivity, as larger farms had better access to modern inputs and machinery. Studies in India during the 1960s confirmed that larger farms achieved higher yields due to greater financial capacity and technology use. Economists John W. Mellor (1969) and Keith Griffin (1974) supported this view.
In Bangladesh, numerous surveys have examined farm productivity across small, medium, and large holdings. Findings often show that medium-sized farms strike the best balance—capable of investing in modern inputs, employing sufficient labor, and managing operations efficiently. Studies conducted in Mymensingh in 1974 and elsewhere in 1982 confirmed that such farms tend to be the most productive.
Globally, the trend has been toward consolidation, with small farms merging or selling land to engage in non-agricultural sectors such as industry and services. In contrast, Bangladesh’s farm structure is moving in the opposite direction—large and medium farms are fragmenting into smaller units. Rising input costs, declining net returns, and land inheritance laws have contributed to this fragmentation. Today, approximately 92 percent of Bangladeshi farmers operate small farms, controlling around 69 percent of total farmland.
Between 2008 and 2019, large farms lost 46.18 percent of their cultivated land, and medium farms lost 36.06 percent, while small farms increased their share by 32.24 percent. The proportion of small farms rose from 84.39 percent to 91.70 percent, while medium farms declined from 14.07 percent to 7.70 percent, and large farms fell from 1.54 percent to just 0.60 percent. This shrinking farm size threatens agricultural mechanization and productivity, reflecting growing land scarcity. The average farm size in Bangladesh has dropped from 2.8 acres in 1974 to 1.47 acres in 2008, and further to 1.29 acres in 2019. Today, average land per capita is only 0.11 acres.
Ownership patterns and sectoral composition in agriculture have also shifted. At independence in 1972–73, crops accounted for 77.06 percent of total agricultural output, with fisheries, livestock, and forestry contributing 9.93, 7.54, and 5.47 percent, respectively. Currently, the crop sector’s share has declined to 46.92 percent, while fisheries, livestock, and forestry have grown to 21.66, 16.38, and 15.04 percent, respectively. Non-crop subsectors are expanding faster due to modernization, higher profitability, and growing demand for protein-rich foods. Crop sector growth, by contrast, has stagnated at around 2–3 percent annually.
Capital generation is now the key challenge for Bangladesh’s agricultural growth. The government has set an agricultural loan target of Tk 39,000 crore for this fiscal year, up slightly from Tk 38,000 crore last year. In FY2024, Tk 37,326 crore was disbursed, meeting 98.23 percent of the target. However, with inflation hovering around 9 percent, the 2.63 percent growth in agricultural credit allocation remains insufficient.
Out of 16.88 million farming families nationwide, only 3.82 million received institutional loans last year, meaning that just 22.63 percent of farmers accessed formal credit. The rest rely on high-interest informal sources or cultivate without adequate capital. Current lending policy allocates 55 percent of total loans to crop production, 2 percent to irrigation and machinery, 20 percent to livestock, 13 percent to fisheries, and 10 percent to rural services and other activities. Critics argue this distribution should better reflect each sub-sector’s contribution to agricultural GDP.
While the Bangladesh Bank offers concessional loans at 4 percent interest for pulses, oilseeds, spices, and maize, banks show little enthusiasm. Less than 1 percent—only 0.75 percent—of total agricultural loans were issued under this facility last year. Moreover, most agricultural loans are channeled through NGOs at higher interest rates, often diverted to non-farm rural activities, reducing their effectiveness in improving productivity.
Agricultural cooperatives could play a stronger role in financing small and marginal farmers, but internal coordination issues have limited their impact. In contrast, new private entrepreneurs are leasing land and investing in modern farming, fisheries, and livestock ventures, signaling a positive shift. Small dairy and poultry farms are emerging across villages, replacing traditional household livestock rearing. These initiatives deserve policy support and incentives, including access to affordable credit for aquaculture and livestock sectors similar to those available for crop production.
Corporate entities are also investing heavily in agriculture, operating large-scale farms, producing seeds, and developing in-house research facilities. Many have entered vegetable, rice, maize, dairy, and poultry production. However, despite expectations of improved competition and lower prices, these companies often collaborate to control market prices. Effective oversight is essential to protect both farmers and consumers.
For sustainable agricultural growth, the adoption of intermediate or appropriate technologies tailored to small farms is crucial. Bangladesh once emphasized this approach, even establishing an “Appropriate Technology Cell” under the Bangladesh Agricultural Research Council (BARC) in the 1970s and 1980s. Although the cell no longer exists, research institutions with agricultural engineering divisions could revive the effort to develop and disseminate suitable technologies for smallholders.
Ultimately, the government bears the primary responsibility for empowering small and marginal farmers. Through institutional loans, grants, training, and subsidies, it can enhance productivity and ensure inclusive growth. Public-private partnerships could also be leveraged to establish domestic manufacturing of agricultural machinery, fertilizers, and inputs, reducing import dependence and strengthening self-sufficiency in production.
Dr. Jahangir Alam is an Ekushey Padak-winning agricultural economist, former Vice-Chancellor of the University of Global Village, former Director General of the Bangladesh Livestock Research Institute (BLRI), and former Member-Director (Agricultural Economics and Rural Sociology) of the Bangladesh Agricultural Research Council (BARC).
