It is an interesting dilemma. Smallholdings are of course 'inefficient' in terms of human resources - a thousand acre farm will produce more food per hour of human effort than a five acre smallholding. However, my feeling is that a smallholding can produce just as much food per acre, and in a totally sustainable way.
I'm becoming quite fascinated by permaculture principles and how to get everything on a smallholding working together.
So much of modern agriculture is about converting fossil fuels into food, and some of the ways we've found to do it are pretty perverse. For example note the discussion recently about bees / neonicotinoids. Some staggering proportion of the USA bee population is literally trucked around the country following things like the orange blossom season. We are interfering with nature on a truly colossal scale. This was brought home to me on a recent business trip to the USA. I took an internal flight from Atlanta (mid-south) to Omaha (mid-North), and flew for about 3 hours over vast areas of nearly identical arable fields, all divided into grids by roads, each with a shiny silo every four squares. No wonder we need to apply so many chemicals to keep this sort of farming viable!
The other area is animal welfare. Remember the debate a month ago about Halal slaughter? I heard an interview on the radio with a representative from a retailers trade body. The interviewer asked "Don't you owe it to your consumers to give them information about how meat was reared and slaughtered?" The response was "There is nothing in our market research that says customers want to see this". In other words "We've found that the less we can make meat look as though it was once alive, the more we sell. The last thing we want to do is remind people that their joint of meat was once a living, breathing animal which has now suffered pain and been killed just to provide their Sunday Lunch".
But then, I'm a privileged dreamer and just playing at it with my wee parcel of land. Certainly not everybody can live that way, and nor would they want to.
Tricky, isn't it?