Small farms amount the largest group of agricultural holdings in Hungary, however their number significantly decreased by 36.4 per cent between 2005 and 2013. These predominantly subsistence or semi-subsistence farms are playing an important role by supplementing the rural household incomes and also producing the significant part of agricultural production. In our research, we examined the situation and future prospects of these small self-employed farms which are typically not engaged in market production and are not professional. The aim of the research was to present the major economic and social parameters of small farms, to identify their types, to border the circle of farms develop to market-oriented entities as well as to draw up development policy proposals.