Farming on the Margin: the Green Revolution and Farm Sizes in India

The agricultural sector’s evolution from numerous smallholdings to larger-scale farms is widely seen as part of the structural transformation process. However, since the 1960s average farm sizes in India and many other developing countries have markedly declined despite ongoing economic development. Can rapid increases in agricultural productivity account for this trend? I investigate the impact of the Green Revolution on farm sizes in India, employing a shift-share-style instrument for adoption of improved crop varieties (HYVs) to account for potential endogeneity. I find that HYV adoption significantly increased the numbers of very small farms (but not large farms) at the district level without affecting total farmland, thereby lowering average size. I explain this result with a simple model of untitled farmland in which rising agricultural productivity increases subdivision of small farms without impacting larger holdings, and show that a calibrated Chen (2017) model captures this intuition and closely matches my empirical findings in partial equilibrium. Simulation with this calibrated model suggests that the general equilibrium effects of the Green Revolution work in the opposite direction: by forestalling increases in the price of food, in aggregate the Green Revolution prevented even greater proliferation of small farms.

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