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We revisit the long-standing empirical evidence of an inverse relationship between farm size and productivity using rich micro data from Uganda. We show that farm size is nega- tively related with yields (output per hectare), as commonly found in the literature, but positively related with farm productivity (a farm-specific component of total factor pro- ductivity). These conflicting results do not arise because of omitted variables such as land quality, measurement error in output or inputs, or specification issues. Instead, we reconcile the findings emphasizing decreasing returns to scale in farm production and farm-specific distortions. We exploit regional variation in land tenure regimes in Uganda in evaluating the role of farm-specific distortions. Our findings point to the limited value of yields (or land productivity) in establishing the size-productivity relationship. More generally, we highlight farm size as an ineffective instrument for policy implementation since size is deeply con- founded by distortions in developing countries.

Are Small Farms Really more Productive than Large Farms?