This paper investigates farm technical, scale, allocative and economic efficiency and its relationship with farm size in Slovenia over the period 1994-2003. Development of farm efficiency during the transition period, the evolution of farm size (small or large) and their contribution to the performance of the agricultural sector are crucial questions for the future of rural areas, in particular in Slovenia where predominantly family farms are of relatively small size. The results suggest that there is a positive relationship between farm efficiency and size in this country, and that labour is more crucial than any other production factor in the country’s rural areas.