Farms require irrigation to work efficiently. Unirrigated farms lose 1Image:Bread.png from their tile production. Any farm built adjacent to fresh water is irrigated. Fresh water sources are rivers, lakes, and oases. You can see if a tile has fresh water by mousing over it; the information is displayed in the tooltip. Before a civilization discovers Civil Service, it cannot build any unirrigated farm except for farms on food resource tiles (wheat, corn, and rice). So you will not see the penalty for unirrigated farms except on such tiles.