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Purpose. The aim of the article is deepening of theoretical and methodological foundations of creation and functioning of farms and disclosure of their economic nature and specifics in the current economic conditions.Methodology of research. A set of methods, techniques and principles of scientific knowledge, fundamental provisions of economic theory and scientific developments on the development of farms are the theoretical and methodological basis of scientific research, the results of which are presented in the article. General and special methods of economic research are used in the course of scientific research, in particular: systematic approach – in studying the relations between phenomena and processes in the system of ensuring the effective development of farms; comparative approach – to compare economic processes in agricultural production at different time periods in order to identify cause and effect; dialectical, abstract and logical methods – in carrying out theoretical generalizations, forming conclusions.Findings. It is revealed that the peculiarity of the functioning of the peasant farms is that they are both a production and a consumer unit, and therefore they combine two goals – production (maximizing income) and consumer (increasing welfare of all household members). The following models of development of the subjects of rural family economy have been systematized: the model of a labour farm; the model of farm based on the use of wage labour; model of a family corporation.It is established that on the basis of family organization of labour a small local economy “family farm” is formed, the peculiarities of which are: dual purpose of development, i.e. realization of entrepreneurial ability of its members to manage on land and maximization of income; the reproduction process depends on the established system of informal institutions; Determinant behaviours of its members include: loyalty to traditions and cultural heritage, social orientation, innovation, resilience, confidence and predictability of household members' actions; combination of multi-vector, contradictory processes; combination of technological, economic and cultural conditions of functioning of the family farm that determine the synergistic effect.Originality. The concept of “family farm” has been further developed, which, unlike the existing ones, characterizes the form of agricultural activity carried out by persons with family ties or with the involvement of employees, and the share of the labour contribution does not exceed the contribution of family members.Practical value. Generalization of the evolutionary development of economic science indicates the existence of two concepts of economic development: the concept of the peasant economy as an entrepreneurial economy, in which the owner hires himself as a worker; the concept of the peasant economy as a working family farm, in which the family as a result of labour costs receives a single labour income and compares its efforts with the obtained material result.Taking into account the abovementioned features of the functioning of farms should be reflected in the development of national and regional programs to support the development of farms.Key words: farming, peasant economy, family farm, peasant, production.

Theoretical and methodological foundations of creation and functioning of farms