The majority of the world's poor live in rural areas. So, developing the small farms on which many of them live not only contributes to overall growth and development, but also improves the welfare of many of the poor. In the early stages of development, small farms are often more efficient than large farms. Smallholder development also promises to be more equitable, and to generate greater local multipliers. Plus, since females tend to be disproportionately engaged in small-scale farming, it can help to correct gender imbalances.
As the green revolution in Asia showed, the potential of smallholder development can be realised. But conditions have changed. Now smallholders face higher transaction costs and have to cope with the fact that agricultural resesarch is biased towards large-scale production. This raises new challenges in small farm development. On the other hand, higher prices of staple foods present opportunities for farmers.