Farm level data as used in this paper show that farm households in Bangladesh agriculture have considerable surplus (surplus being defined as income minus consumption of ‘essential goods’) and that surplus varies positively with farm size. However, reinvestment of surplus in productive agricultural uses was found to be negatively related to farm size. Explanation this phenomenon was sought in some technical and structural constraints imposed on productive use of surplus. One particular argument that rural credit market diverts capital away from productive uses was not found to be sufficiently convincing. The evidence on the contrary seems to vindicate Schultz’s argument that investment is a function of profitable investment opportunities.