The so-called subsistence farmer is forced to produce for her family’s subsistence by the huge difference between the low farm-gate prices for what she produces and the high market prices for the same products. This differential means that she has a comparative advantage in producing all her family needs herself rather than producing some things for sale and relying on the market for things she is not technically best placed to produce. Only the better off can afford to be irrational in what they choose to produce. The subsistence farmer is operating at the edge so every production and marketing decision has a serious impact on their welfare and improving market efficiency has a major influence on their production options and technologies.
Therefore improving the functioning and performance of agricultural input markets will only be a partial solution. Markets must be improved for inputs, outputs and capital to level the playing field for smallholders and enable them to raise their incomes. I am deliberately not including the market for land because I am yet to be convinced that there is an effective way of protecting smallholders from speculative buyers which is neither in their long-term interest nor are the buyers likely to be more productive farmers.