Drawing on empirical evidence from the Czech Republic, differences in agricultural labour productivity at the micro-regional level are examined. The role of geographical factors: natural conditions, landscape fragmentation, localisation and urbanization economies, are discussed. In addition, we also test the effects of farm size structure to capture the results of internal scale economies. The key importance of natural conditions is confirmed: they were significantly more important than farm characteristics such as size structure, ownership status and mode of production. Regional agricultural labour productivity was positively influenced by the nominal price of agricultural land and population density. Surprisingly, micro-regions dominated by large farms performed at lower productivity levels than micro-regions with fragmented farm size structure in the Czech Republic.