The socio-economic value of the role of small family farmers in developing countries is a long debated issue. Conventional thinking, points at the social role of small farmers mainly as absorbers of excess labor in rural areas and suppliers of food. In economic terms the relative production efficiency advantage, is at the forefront of small scale farmers’ supporters.

This paper addresses the question of what are the costs of being a small family farmer. If small farmers by some measure of scale or size are poorer in terms of welfare relative to larger ones, then scale or size should entail costs that hinder smallholders in achieving greater economic output. Marginal value products are estimated for land, labor, inorganic fertilizer and seeds, at the farm household level and compared with marginal costs as approximated by their prevailing market prices. Price efficient and inefficient farmers are identified and equivalent value losses are computed as shares of household income, per hectare and for the society. This paper computes a measure of these costs and studies them in relation with farm size as well as many other variables.