The small farmers occupy a focal position not only in terms of their large number but also from the standpoint of area under their ploughs in the Punjab. For affecting any long-term improvements in the performance of the vast majority of small farmers in the future, both planners and policy makers would essentially require information on key factors responsible for high or low level of farm income. The present study is an attempt at identifying factors causing farm income differentials. The results show that differences in the level of variable component of farm costs and livestock strength at the farm were mainly responsible for farm income variation on small farms.
