Latvian agriculture is characterized by a large number of small farms – 95% of the total number of farms (79 130 farms in total numbers) are with the standard output less than 25 thousand EUR (CSB, 2011). These farms employ 79% of the total agricultural labour force (in annual work units (AWU)), hold about half of the total utilized agricultural area (UAA), but produce just 30% of the total standard output of Latvian agriculture. Along with the apparent low production level and productivity at these farms, they also receive small cash income due to the high level of self consumption and low volumes of sales.

The aim of the paper is to analyse the possibilities to improve the market capability of small farms in Latvia. Therefore the paper deals with the factors constraining development plans of small farm holders, the current possibilities for improving small farm market capability, the possible development strategies to choose, and proposals for the improvement of small farm market capability in Latvia. The most significant barriers to implement the development plans for Latvian small farms are the lack of the production assets and also the difficulties to attract funding for long-term investments and current assets, as well as poor market infrastructure. The existing support measures have had a positive impact on the structural changes in Latvian  agriculture; however, these measures have not been sufficient to solve the problems of the market capability of small farms and to contribute to their economic growth sufficiently. In order to improve the market capability of small farms of Latvia, programmatic approach is proposed consisting of four components: 1) training, 2) development of a business plan, 3) evaluation of a business plan, and 4) implementation of the business idea. Different instruments for the implementation of business ideas are attractable depending on whether the owner has selected the implementation of full-time agricultural strategies, part-time agricultural strategies or business diversification strategies.