This study examines the impacts of empirical definition of zero output values on price elasticities, economy of scope, and scale using the Translog cost function. A system of cost and factor share equations with regularity conditions imposed is estimated. Resultsshow that the choice of default values affects policy recommendations.

Small farms have shown spirited livelihood over time as they have significantly influenced agricultural production and rural poverty reduction. Small farm characterizes agriculture in Nigeria and seems to be persisting. What is the relationship between these persisting small farms and productivity? Multistage sampling technique was engaged in choosing the samples desirable for this study and where 880 farming households' data across the four regions of Nigeria were used to examine this linkage. Data were analyzed by descriptive statistics, cross‐tabulation analysis, and Total Factor Productivity analysis. Majority of the respondents derived livelihood in petty farming, but income received is somewhat insignificant. Farming households with less than 2 ha of agricultural land are poorer (30.1%) and used family/communal land for farming purposes. Total Factor Productivity analysis indicated 29% of these farmers operated on a low productivity out of which 65% of them identified poor, hence confirm the correlation between small farms and low productivity. About 67% of the poor households with low productivity augment household income from nonfarm rural acridities. Productivity has a significant effect on small farms doggedness at p < .05 and a deviation of 3.21. Thus, 1% increase in productivity would lead to 3.21% decrease in small farms persistence. Hence, the empirical analysis of persistence of small farms and the productivity models has thus shown that there exists a causal relationship. The simultaneity test between small farms and productivity revealed a direct link. This suggests that policies that can expedite efficient rural service delivery, interactions of agricultural production systems, and rural livelihoods can influence income increase and can also do same to improve productivity. Similarly, policies that promote the development of the rural nonfarm sector are crucial to help increase income available for farming and hence, improve smallholders' well‐being, preventing small farms from being a pool of the poor.

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