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Are part-time and full-time small farms detrimental to agriculture : evidence from Taiwan, 1972-1980 1985

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ARE PART-TIME AND FULL-TIME SMALL FARMS DETRIMENTAL TO AGRICULTURE EVIDENCE FROM TAIWAN, 1972 - 1980 by RITA WARDENIER L i e . D o ctorandus, K a t h o l i e k e U n i v e r s i t e i t , Leuven, 1974 A THESIS SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY i n THE FACULTY OF GRADUATE STUDIES Department Of Economics We a c c e p t t h i s t h e s i s as c o n f o r m i n g t o the r e q u i r e d s t a n d a r d THE UNIVERSITY OF BRITISH COLUMBIA August 1985 -r^l* © R i t a W a r d e n i e r , 1985 In presenting t h i s thesis i n p a r t i a l f u l f i l m e n t of the requirements for an advanced degree at the University of B r i t i s h Columbia, I agree that the Library s h a l l make i t f r e e l y available for reference and study. I further agree that permission for extensive copying of t h i s thesis for scholarly purposes may be granted by the head of my department or by his or her representatives. I t i s understood that copying or publication of t h i s thesis for f i n a n c i a l gain s h a l l not be allowed without my written permission. Department of ECONOMICS The University of B r i t i s h Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 D a t e s ^ , \°m DE-6 r v f t n i i ABSTRACT Slow a g r i c u l t u r a l growth i n the s e v e n t i e s i n Taiwan has induced a second l a n d r e f o r m debate which s t a r t s from the assumption t h a t s m a l l farms, and e s p e c i a l l y s m a l l p a r t - t i m e farms, a r e l e s s p r o d u c t i v e than l a r g e f u l l - t i m e farms. But very l i t t l e e m p i r i c a l e vidence i s p r e s e n t e d . T h i s s t u d y attempts t o i n v e s t i g a t e the v a l i d i t y of the a s s u m p t i o n . The data i s drawn from the 1972-1980 su r v e y s on the N o r t h , M i d - , South r i c e and Sugar r e g i o n s i n the ( d a i l y ) 'Farm Record Keeping F a m i l i e s ' surveys.' The d i f f e r e n c e s i n p r o d u c t i o n p a t t e r n and s i m p l e l a n d p r o d u c t i v i t y measures were a n a l y s e d on the b a s i s of m u l t i - c h a r a c t e r i s t i c dummy v a r i a b l e r e g r e s s i o n s . T o t a l f a c t o r p r o d u c t i v i t y was e s t i m a t e d w i t h value-added f u n c t i o n s of f i v e f a m i l y - s u p p l i e d i n p u t s : paddy and dry c u l t i v a t e d l a n d , male and female l a b o u r days and farm a s s e t s . The response of the a g r a r i a n s t r u c t u r e t o the l o s s of r u r a l workers s i n c e 1968 (and more r e c e n t l y of l a n d t o o ) , has been a d e c l i n e i n l a r g e f u l l - t i m e f a r m i n g . Our study shows t h a t t h i s p r o c e s s s h o u l d not be c o u n t e r e d a r t i f i c i a l l y because t h e r e i s no e v i d e n c e t h a t l a r g e f u l l - t i m e f a r m i n g i s s u p e r i o r t o s m a l l f u l l - t i m e f a r m i n g and o n l y on dominant l a n d t ype farms i n the r e g i o n s a r e s m a l l f u l l - t i m e farms more e f f i c i e n t than s m a l l p a r t - t i m e farms. Large f u l l - t i m e farms have not responded f a s t e r t o s h i f t s towards n o n - s t a p l e food demand, nor t o m e c h a n i z a t i o n and new i n t e r m e d i a t e i n p u t s . Land p r o d u c t i v i t y on l a r g e f u l l - t i m e farms i s s u b s t a n t i a l l y lower than on s m a l l f u l l - t i m e farms and o n l y s l i g h t l y h i g h e r than on s m a l l p a r t - t i m e farms. Farm in v e s t m e n t , farm a s s e t s and machine s t o c k per h e c t a r e a r e s i m i l a r a c r o s s farms and a d d i t i o n a l l y , the r e t u r n s t o s c a l e are c o n s t a n t because the 'custom s e r v i c e s ' system has made machinery d i v i s i b l e . In some c a s e s , p a r t - t i m e s m a l l farms show some t o t a l f a c t o r e f f i c i e n c y l o s s a g a i n s t f u l l - t i m e s m a l l farms, p r o b a b l y because the recommended f a r m i n g methods a r e not a p p r o p r i a t e f o r p a r t - t i m e farms. P o l i c i e s s h o u l d c o n t i n u e t o improve the working of the l a n d market but no a r t i f i c i a l a g r a r i a n r e s t r u c t u r i n g i s recommended. The p r o d u c t i o n of s u p e r v i s i o n - s e n s i t i v e c r o p s needs s m a l l f u l l - t i m e f a r m e r s and p a r t - t i m e f a r m i n g l i m i t a t i o n s would produce l i t t l e e f f i c i e n c y g a i n a g a i n s t the nightmare of l a b o u r movements r e s t r i c t i o n s . R esearch S u p e r v i s o r : Dr. Robert A l l e n i v TABLE OF CONTENTS Page LIST OF TABLES v i i LIST OF FIGURES x i i ACKNOWLEDGEMENTS x i i i Chapter I INTRODUCTION 1 I I AGRICULTURE IN TAIWAN 4 A. INTRODUCTION 4 B. GOVERNMENT POLICY AND AGRICULTURAL DEVELOPMENT . 4 C. FACTOR MARKETS AND FARM ORGANIZATION 10 C.1 Farm s i z e and the l a n d markets 12 C. 2 P a r t - t i m e f a r m i n g , household l a b o u r • s u p p l y and the r u r a l l a b o u r market . 19 D. STATEMENT OF THE PROBLEM 27 E. NOTES 31 I I I DATA 35 A. INTRODUCTION 35 B. THE ANNUAL REPORT OF THE FARM RECORD KEEPING FAMILIES 36 C. DATA FROM THE FARM RECORD KEEPING FAMILIES 37 D. DATA BASE AND CHARACTERISTICS OF THE FARMS 41 D. 1 S i z e of the farm (s) 41 D.2 P a r t i c i p a t i o n ( p ) : the degree of importance of f a r m i n g t o the farm h o u s e h o l d 43 D.3 A g r i c u l t u r a l r e g i o n s ( r ) 45 D.4 Time ( t ) 47 D.5 The d i s t r i b u t i o n of farm households .. 48 V •E. NOTES 51 IV PRODUCTION PATTERNS 55 A. INTRODUCTION .. . 55 B. LITERATURE 59 C. EMPIRICAL METHOD: THE DUMMY VARIABLE MODEL 62 D. FAMILY ENDOWMENT, LABOUR AND MACHINE USE PATTERN 67 E. OUTPUT PATTERN PER HECTARE 74 F. INTERMEDIATE INPUTS PER HECTARE 80 G. SIMPLE PRODUCTIVITY MEASURES AND INVESTMENT PER HECTARE 83 H. CONCLUSION 88 I . NOTES 93 V TOTAL FACTOR PRODUCTIVITY , 99 A. INTRODUCTION 99 B. LITERATURE 101 C. SOURCES OF INEFFICIENCY 105 D. TREATMENT OF THE VARIABLE INPUT-OUTPUT MIX 112 E. FUNCTIONS 122 E.1 L i n e a r dummy model 123 E.2 L i n e a r model 124 E.3 The g e n e r a l i z e d l i n e a r model 125 F. DATA 127 ' G. THE STATISTICAL PROPERTIES OF THE MODELS 130 v i H. ESTIMATION RESULTS 133 H.1 I n t r o d u c t i o n 133 H.2 Retu r n s t o s c a l e 138 H.3 A l l o c a t i v e e f f i c i e n c y 139 H.4 T e c h n i c a l e f f i c i e n c y 158 I . SUMMARY AND CONCLUSIONS 160 J . NOTES 166 VI CONCLUSION 172 BIBLIOGRAPHY . 182 APPENDIX A: PRICES AND LAND PRODUCTIVITY MEASURES .. 191 A. INTRODUCTION 191 B. PRICES, PRICE DEFLATORS 191 B.1 I n d i v i d u a l commodity group p r i c e s .... 191 B.2 The index of net p r o f i t 192 B.3 The index of a s s e t p r i c e s 193 B. 4 M i s c a l e n e o u s p r i c e s 193 . C. LAND PRODUCTIVITY MEASURES . 196 C. 1 The m u l t i p l e c o r p index 196 C.2 R i c e y i e l d s 197 C.3 N o n - r i c e v a l u e y i e l d s 197 C.4 The ou t p u t per h e c t a r e 198 C.5 P r o f i t per h e c t a r e 198 C.6 Farm investment and s a v i n g s per h e c t a r e 199 APPENDIX B: INFORMATION FOR CHAPTER I I 200 APPENDIX C: INFORMATION FOR CHAPTER I I I 208 APPENDIX D: INFORMATION FOR CHAPTER IV 212 APPENDIX E: INFORMATION FOR CHAPTER V 248 v i i LIST OF TABLES Page T a b l e 2.1 The number of h o u s e h o l d s c l a s s i f i e d by type of work and by s i z e of farm .. 11 Ta b l e 2.2 Farm households by type of work and s i z e . . . 11 Ta b l e 2.3 Ownership of the farm l a n d 14 Table 2.4 Changes i n l a n d h o l d i n g s by s i z e of farm and by reason 17 Ta b l e 2.5 D i s t r i b u t i o n of workers i n a g r i c u l t u r e and i n the economy by age 25 Ta b l e 2.6 D i s t r i b u t i o n of workers i n a g r i c u l t u r e and i n the economy by l e v e l of e d u c a t i o n a t t a i n e d 25 T a b l e 2.7 D i s t r i b u t i o n of farm household l a b o u r by employment s t a t u s and by age 26 Ta b l e 3.1 Farm type d i s t r i b u t i o n 49 T a b l e 4.1 Labour, machine use and f a m i l y endowments per h e c t a r e 68 T a b l e 4.2 S e l e c t e d output amounts per h e c t a r e .. 76 T a b l e 4.3 S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e 81 Ta b l e 4.4 Simple p r o d u c t i v i t y measures and investment per h e c t a r e 85 T a b l e 5.1 Shadow p r i c e f o r l a b o u r 1 140 T a b l e 5.2 ' Shadow p r i c e f o r l a b o u r 2 142 Ta b l e 5.3 Shadow p r i c e f o r farm a s s e t s 143 Ta b l e 5.4 Shadow p r i c e f o r paddy l a n d 144 Ta b l e 5.5 Shadow p r i c e f o r d r y l a n d 145 v i i i T a b l e 5.6 Shadow p r i c e s i n the g e n e r a l i z e d l i n e a r model f o r f o u r r e g i o n s i n the s m a l l f u l l - t i m e , l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms . 148 Tabl e 5.7 Shadow p r i c e s i n the l i n e a r s i z e - p a r t i c i p a t i o n dummy model f o r fou r r e g i o n s i n the s m a l l f u l l - t i m e , l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms 149 Tabl e 5.8 Shadow p r i c e s f o r the Sugar a l l - d r y farms i n the g e n e r a l i z e d l i n e a r and l i n e a r dummy model 150 Table A.1 S e l e c t e d p r i c e s used i n t h i s study ... 195 Tabl e B.1 Growth r a t e s of p r o d u c t i o n i n s p e c i f i c a g r i c u l t u r a l c r o p s 201 Tabl e B.2 A g r i c u l t u r a l e x p o r t s 202 Ta b l e B.3 Labour market s i t u a t i o n 203 Tabl e B.4 Farm machine s t o c k 204 Ta b l e B.'5 Farm machine s t o c k by s i z e 204 Ta b l e B.6 P a t t e r n s of e m i g r a t i o n - i m m i g r a t i o n i n t o a g r i c u l t u r e 206 Tabl e C.1 D i s t r i b u t i o n of sample o b s e r v a t i o n s .. 210 Tabl e D.1 NR: Labour use and f a m i l y endowments per h e c t a r e 215 Tabl e D.2 MR: Labour use and f a m i l y endowments per h e c t a r e 217* Tabl e D.3 SR: Labour use and f a m i l y endowments per h e c t a r e 219 Tabl e D.4 SUG: Labour use and f a m i l y endowments per h e c t a r e 221 Tabl e D.2 NR: S e l e c t e d output amounts per h e c t a r e 223 Ta b l e D.6 MR: S e l e c t e d o u t p u t amounts per h e c t a r e 225 i x T a b l e D.7 SR: S e l e c t e d output amounts per h e c t a r e 227 T a b l e D.8 SUG: S e l e c t e d output amounts per h e c t a r e . 229 Ta b l e D.9 NR: S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e 231 Ta b l e D.10 MR: S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e 233 T a b l e D.11 SR: S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e 235 Ta b l e D.12 SUG: S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e 237 Ta b l e D.13 NR: s i m p l e p r o d u c t i v i t y measures .... 239 T a b l e D.14 MR: s i m p l e p r o d u c t i v i t y measures .... 241 Ta b l e D.15 SR: s i m p l e p r o d u c t i v i t y measures .... 243 Ta b l e D.16 SUG: s i m p l e p r o d u c t i v i t y measures .... 245 T a b l e E.1 F - s t a t i s t i c s f o r the t e s t of c o n s t a n t r e t u r n s t o s c a l e 247 T a b l e E.2 F - s t a t i s t i c s f o r the t e s t of l i n e a r i t y 249 T a b l e E.3 F - s t a t i s t i c s f o r the t e s t of c o n s t a n t male m a r g i n a l p r o d u c t s 249 T a b l e E.4 F - t e s t f o r l i n e a r i t y i n the s i z e l i n e a r model 250 T a b l e E.5 F - t e s t f o r p a r t i c i p a t i o n e f f e c t s i n the s i z e - p a r t i c i p a t i o n l i n e a r model .. 250 T a b l e E.6 F - t e s t f o r s i z e e f f e c t s i n the s i z e - p a r t i c i p a t i o n l i n e a r model 251 T a b l e E.7 I n f o r m a t i o n about the f i t of the e s t i m a t e d f u n c t i o n s 252 T a b l e E.8 G e n e r a l i z e d L i n e a r f u n c t i o n c o e f f i c i e n t s 253 X T a b l e E.9 Si g n p a t t e r n of the g e n e r a l i z e d l i n e a r f u n c t i o n : c o e f f i c i e n t s and d i a g o n a l of the second o r d e r d e r i v a t i v e (average) 254 T a b l e E.10 S t r u c t u r e of the e s t i m a t e d e r r o r of the l i n e a r model: t e s t s t a t i s t i c s .... 257 T a b l e E.11 S t r u c t u r e of the e s t i m a t e d e r r o r of the g e n e r a l i z e d l i n e a r model: t e s t s t a t i s t i c s . 257 T a b l e E.12 S t r u c t u r e of the e s t i m a t e d e r r o r of the g e n e r a l i z e d l i n e a r model ( s i z e , p a r t i c i p a t i o n , year dummy model) 258 T a b l e E.13 S t r u c t u r e of the e s t i m a t e d e r r o r of the g e n e r a l i z e d l i n e a r model ( s i z e , p a r t i c i p a t i o n dummy model) 260 T a b l e E.14 S t r u c t u r e of the e s t i m a t e d e r r o r of the l i n e a r model ( s i z e , p a r t i c i p a t i o n dummy model) 261 T a b l e E.15 NR: l i n e a r . m o d e l w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s 262. T a b l e E.16 MR: l i n e a r model w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s 263 T a b l e E.17 SR: l i n e a r model w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s 264 T a b l e E.18 SUG: l i n e a r model w i t h dummy v a r i a b l e s shadow p r i c e s h i f t s 265 T a b l e E.19 NR: G e n e r a l i z e d l i n e a r model w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s . 266 T a b l e E.20 MR: G e n e r a l i z e d l i n e a r model w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s . 267 T a b l e E.21 SR: G e n e r a l i z e d l i n e a r model w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s . 268 T a b l e E.22 SUG: G e n e r a l i z e d l i n e a r model w i t h dummy v a r i a b l e s : shadow p r i c e s h i f t s . 269 T a b l e E.23 NR: e s t i m a t e d shadow p r i c e s f o r s m a l l f u l l - t i m e , l a r g e f u l l - t i m e , s m a l l p a r t - t i m e farms 270 x i T a b le E.23 MR: e s t i m a t e d shadow p r i c e s f o r s m a l l f u l l - t i m e , l a r g e f u l l - t i m e , s m a l l p a r t - t i m e farms 271 Tab l e E.25 SR: e s t i m a t e d shadow p r i c e s f o r s m a l l f u l l - t i m e , l a r g e f u l l - t i m e , s m a l l p a r t - t i m e farms 272 Table E.26 SUG: e s t i m a t e d shadow p r i c e s f o r s m a l l f u l l - t i m e , l a r g e f u l l - t i m e , s m a l l p a r t - t i m e farms 273 x i i LIST OF FIGURES Page F i g u r e 5.1 1 55 F i g u r e 5.2 155 ACKNOWLEDGEMENTS I would l i k e t o e x p r e s s my a p p r e c i a t i o n t o Dr. Robert A l l e n , Dr. Samuel Ho, and Dr. Ashok Kothwal f o r t h e i r comments and s u g g e s t i o n s over the c o u r s e of t h i s s t u d y . Without t h e i r a s s i s t a n c e t h i s d i s s e r t a t i o n would not have been completed. I would a l s o l i k e t o thank Dr. Wang, Chairman of the C o u n c i l f o r A g r i c u l t u r a l P l a n n i n g and Development ( f o r m e r l y the S i n o - A m e r i c a n J o i n t Commission f o r R u r a l R e c o n s t r u c t i o n and Development, T a i p e i , R.O.C.) f o r a l l o w i n g me t o work a t the C o u n c i l f o r 11 months i n 1980. I want t o thank, e s p e c i a l l y Dr. Mao Y.K., D i r e c t o r of the Department of Economics and P l a n n i n g a t the C o u n c i l , f o r the generous support and encouragement I r e c e i v e d when I was p a r t of h i s department. I a l s o thank Mr. L i n S.T., C h i e f I n t e r n a t i o n a l C o o p e r a t i o n and I n f o r m a t i o n D i v i s i o n , who gave g e n e r o u s l y of h i s time t o h e l p me w i t h I m m i g r a t i o n and w i t h h o u s i n g . I want t o thank e s p e c i a l l y Dr. Chen W.H., who was always w i l l i n g t o answer my q u e s t i o n s about the a g r i c u l t u r a l s e c t o r and the sometimes p u z z l i n g b e h a v i o u r and r e p o r t i n g of the farmers of the sample. M i s s Chen Y.E. shared her wide knowledge of the s t r u c t u r e of a g r i c u l t u r a l p r i c e s and growth p a t h . I thank Dr. Chuang F.T. who s u p p l i e d me w i t h the c o m p u t e r i z e d r e c o r d s . I a l s o want t o thank Mr. T s a i G.C-., at t h a t time C h i e f of the A g r i c u l t u r a l Economics D i v i s i o n a t x i v the Taiwan P r o v i n c i a l Department of A g r i c u l t u r e and F o r e s t r y (PDAF), where the Farm Record Keeping Survey i s c o l l e c t e d . E s p e c i a l l y I thank Mr. Lee, C h i e f of the FRKS d i v i s i o n , who t o g e t h e r w i t h h i s peop l e p r o v i d e d so much a d d i t i o n a l s e r v i c e s c o n n e c t e d t o the FRKS. I a l s o thank Mr. Wu W.J., D i r e c t o r of the A g r i c u l t u r a l S c i e n c e i n f o r m a t i o n C e n t e r , as a l o t of the hand c o p y i n g of the m a t e r i a l was f i n a n c e d and o r g a n i z e d by t h i s o r g a n i z a t i o n . But most of a l l , I thank Mr. Chen Chin-Chun (of CAPD). Without h i s generous l i a i s o n a c t i v i t y , I would not have been a b l e t o f i n i s h t h i s d i s s e r t a t i o n , s i n c e a l o t of a d d i t i o n a l i n f o r m a t i o n had t o be c o l l e c t e d a f t e r my r e t u r n t o Canada. I a l s o thank him and h i s w i f e L i - F e n f o r t h e i r f r i e n d s h i p and f o r a l l o w i n g me t o share i n t h e i r l i f e s t y l e a t home i n T a i p e i and on the a n c e s t r a l f a r m s t e a d . I thank my Canadian f r i e n d s Dr. Crean P., Mi s s Leduc J . , and the Roggeman f a m i l y , who encouraged me t o c o n t i n u e t o the end, and Mr. M c G i l l i v r a y who a t g r e a t speed typed up t h i s d i s s e r t a t i o n . F i n a l l y , I thank by p a r e n t s f o r the c o n t i n u o u s encouragement they gave d u r i n g t h e s e y e a r s . I d e d i c a t e t h i s d i s s e r t a t i o n t o my f a t h e r who always s u p p o r t e d me i n my c h o i c e of s t u d y , and who u n h a p p i l y d i d not l i v e t o share the jo y of t h i s moment. RITA WARDENIER Vancouver, August 1985- 1 CHAPTER I INTRODUCTION D u r i n g the c o l o n i a l p e r i o d and the e a r l y post World War I I decades, the s m a l l s c a l e farm s e c t o r was the mainstay of Taiwan's economy. However, b e g i n n i n g i n the l a t e 1960s, the pace of a g r i c u l t u r a l growth d e c l i n e d s i g n i f i c a n t l y . Alarmed by t h i s development, Taiwan's p o l i c y makers began a s e a r c h f o r the causes of a g r i c u l t u r e ' s s l u g g i s h performance. Of the many f a c t o r s i d e n t i f i e d as p o s s i b l e r e a s o n s , two a s s o c i a t e d w i t h the a g r a r i a n s t r u c t u r e of a g r i c u l t u r e have r e c e i v e d a t t e n t i o n r e c e n t l y from Taiwanese p l a n n e r s : (1) d e c l i n i n g farm s i z e and (2) a growing tendency of Taiwanese f a r m e r s , p a r t i c u l a r l y s m a l l f a r m e r s , t o o p e r a t e farms on a p a r t - t i m e b a s i s . P l a n n e r s r e a c t t o the s m a l l farm s i z e and the p a r t - t i m e f a r m i n g w i t h a l a r m because they b e l i e v e t h a t s m a l l farms cannot t a k e advantage of the s c a l e economies a s s o c i a t e d w i t h m e c h a n i z a t i o n and t h a t p a r t - t i m e farmers c a n n o t , or do n o t , use t h e i r l a n d o p t i m a l l y . M e c h a n i z a t i o n has been underway i n Taiwan s i n c e the e a r l y 1970s i n r esponse t o the i n c r e a s i n g s c a r c i t y of a g r i c u l t u r a l l a b o u r , so t h a t i t i s c u r r e n t l y b e l i e v e d t h a t economies of s c a l e g a i n s a r e l o s t on s m a l l farms. The e x p a n s i o n of the n o n - a g r i c u l t u r a l s e c t o r s has e n t i c e d more and more farm 2 households i n t o t a k i n g o f f - f a r m employment, so t h a t i t i s now b e l i e v e d t h a t l a n d i s not o p t i m a l l y used on p a r t - t i m e farms because farming i s a r e s i d u a l a c t i v i t y and because l a n d i s h e l d as a s t o r e of v a l u e and f o r s p e c u l a t i v e r e a sons. I m p e r f e c t i o n s i n the l a n d market, caused p r i m a r i l y by the r e s t r i c t i o n s i n the Land Reform Laws of 1949-53, may have hampered market t r a n s a c t i o n s t h a t would have h e l p e d c o n s o l i d a t e l a n d h o l d i n g s . The b e l i e f t h a t s m a l l farms and p a r t - t i m e f a r m i n g are d e t r i m e n t a l t o s u s t a i n e d a g r i c u l t u r a l growth has l e d p l a n n e r s t o c a l l f o r a second l a n d r e f o r m , which would promote more l a r g e f u l l - t i m e f a r m i n g . I n t e r e s t i n g l y and s u r p r i s i n g l y , the d i s c u s s i o n about the need f o r change i n the a g r a r i a n s t r u c t u r e j u s t d e s c r i b e d has taken p l a c e l a r g e l y w i t h o u t the s u pport of e m p i r i c a l e v i d e n c e . And y e t , the is.sues i n q u e s t i o n a r e e m p i r i c a l ones. The purpose of t h i s study i s t o attempt t o p r o v i d e the p o l i c y d i s c u s s i o n on farm s i z e and p a r t - t i m e f a r m i n g w i t h the e m p i r i c a l b a s i s i t c u r r e n t l y l a c k s . In b r i e f , the study t r i e s t o p r o v i d e answers t o the f o l l o w i n g two q u e s t i o n s . ' (1) Are s m a l l f a r mers i n Taiwan l e s s p r o d u c t i v e than l a r g e farms? And (2) i s p a r t - t i m e f a r m i n g l e s s p r o d u c t i v e than f u l l - t i m e f a rming? The s t u d y i s o r g a n i z e d as f o l l o w s . Chapter two examines major changes i n the government's a g r i c u l t u r a l p o l i c y and i n the o r g a n i z a t i o n a l s t r u c t u r e of a g r i c u l t u r e i n the post World War I I p e r i o d . In the c o n t e x t of t h i s b r i e f 3 overview of the h i s t o r i c a l and i n s t i t u t i o n a l background, a set of s p e c i f i c e m p i r i c a l q u e s t i o n s are proposed which are answered i n the c h a p t e r s t h a t f o l l o w . Chapter t h r e e d e s c r i b e s and a s s e s s e s the main d a t a source used i n t h i s s t u d y : the Annual Report of Farm Record Keeping F a m i l i e s . Chapters f o u r and f i v e , the c o r e of the s t u d y , p r o v i d e the e m p i r i c a l e v i d e n c e on p r o d u c t i o n and p r o d u c t i v i t y d i f f e r e n c e s between s m a l l f u l l - t i m e , s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms. - D i f f e r e n c e s i n p r o d u c t i o n p a t t e r n s , l a n d p r o d u c t i o n measures and i n v e s t m e n t - s a v i n g s b e h a v i o u r are p r e s e n t e d i n c h a p t e r f o u r . In c h a p t e r f i v e , v alue-added f u n c t i o n s of the f a m i l y s u p p l i e d f a c t o r s a r e e s t i m a t e d and used t o t e s t f o r s c a l e economies, t e c h n i c a l e f f i c i e n c y i n p a r t - t i m e . f a r m i n g , ' and a l l o c a t i v e e f f i c i e n c y . Chapter s i x summarizes the f i n d i n g s and o f f e r s some c o n c l u s i o n s . 4 CHAPTER I I AGRICULTURE IN TAIWAN A. INTRODUCTION The purpose of t h i s c h a p t e r i s t o p r o v i d e the h i s t o r i c a l and i n s t i t u t i o n a l background t o the c u r r e n t d i s c u s s i o n i n Taiwan about the need f o r a second l a n d r e f o r m , one t h a t would reduce the number of s m a l l p a r t - t i m e farms and i n c r e a s e the number of l a r g e f u l l - t i m e f a r m s 1 . The c h a p t e r b e g i n s w i t h a d i s c u s s i o n of the major changes i n the government's a g r i c u l t u r a l development p o l i c y . The growth i n the number of s m a l l farms and of p a r t - t i m e farms a r e next examined i n the c o n t e x t of Taiwan's l a n d and l a b o u r m a r k e t s . The c h a p t e r c o n c l u d e s w i t h a statement of the s i z e p a r t - t i m e i s s u e t h a t i s c u r r e n t l y under d i s c u s s i o n i n Taiwan and an o v e r v i e w of the q u e s t i o n s t h a t w i l l be answered i n t h i s s t u d y . B. GOVERNMENT POLICY AND AGRICULTURAL DEVELOPMENT In the post World War I I p e r i o d , a g r i c u l t u r a l development has come about p r i m a r i l y t h r ough the e f f o r t s of i n d i v i d u a l f armers r e s p o n d i n g t o changing economic o p p o r t u n i t i e s . However, the government, by s u p p l y i n g 5 a g r i c u l t u r e w i t h the needed i n f r a s t r u c t u r e and by m a n i p u l a t i n g the economic environment w i t h i n which farmers o p e r a t e , has been a b l e t o i n f l u e n c e both the pace and the d i r e c t i o n of a g r i c u l t u r a l d e v e l o p m e n t 2 . In a d d i t i o n , the government has i n t e r v e n e d d i r e c t l y a t s e v e r a l i m p o r t a n t j u n c t u r e s and i n t r o d u c e d d r a m a t i c s t r u c t u r a l changes t o a g r i c u l t u r e . There i s a f e e l i n g i n Taiwan t h a t the time may a g a i n be r i p e f o r the government t o i n t e r v e n e . In 1949, when i t r e t r e a t e d from the m a i n l a n d t o Taiwan, the Chinese N a t i o n a l i s t Government made the p o l i t i c a l d e c i s i o n t o implement i t s l o n g s t a n d i n g p o l i c i e s on l a n d r e f o r m . The hope was t h a t l a n d r e f o r m would not o n l y r e s u l t i n a more e q u i t a b l e d i s t r i b u t i o n of l a n d , the major r u r a l asset,- but t h a t by g i v i n g ownership t o c u l t i v a t o r s i t would m o t i v a t e them t o i n c r e a s e a g r i c u l t u r a l p r o d u c t i o n and p r o d u c t i v i t y . The l a n d r e f o r m was implemented i n t h r e e s t a g e s 3 . In 1949 a v e r y s t r i c t Rent R e d u c t i o n Act was i n t r o d u c e d , i n 1951 p u b l i c l a n d s were s o l d t o the t e n a n t s and i n 1953 the Land To T i l l e r A c t , which e n a b l e d t e n a n t s t o buy the l a n d they c u l t i v a t e d , was p romulgated . The r e s u l t was a v a s t i n c r e a s e i n the number of o w n e r - c u l t i v a t o r s , which r a i s e d the share of o w n e r - c u l t i v a t o r s i n t o t a l farm households from 32% i n 1947 t o 64% i n 1960". B e s i d e s i n t r o d u c i n g l a n d r e f o r m , the government a l s o r e p a i r e d and extended the a g r i c u l t u r a l i n f r a s t r u c t u r e ( f i r s t 6 b u i l t d u r i n g the c o l o n i a l p e r i o d ) , and i n t r o d u c e d i n d u s t r i a l i n p u t s and new p r o d u c t i o n t e c h n i q u e s t h a t were d i v i s i b l e and s c a l e n e u t r a l and thus s u i t a b l e f o r wide a d o p t i o n by Taiwan's s m a l l f a r m e r s . However, government p o l i c y i n t h i s e a r l y p e r i o d was not o n l y d e v e l o p m e n t a l but a l s o e x t r a c t i v e . Through i t s compulsory r i c e purchase and f e r t i l i z e r - r i c e b a r t e r program, the government m a n i p u l a t e d the terms of t r a d e a g a i n s t farmers and e x t r a c t e d a c o n s i d e r a b l e share of the a g r i c u l t u r a l s u r p l u s . In s p i t e of t h i s , the economic d u r i n g the 1960s and the f i r s t h a l f of the 1970s was, on b a l a n c e , f a v o u r a b l e t o a g r i c u l t u r a l growth. By t h e l a t e 1960s, however, the c o n d i t i o n s f a c i n g Taiwan's farm households had changed c o n s i d e r a b l y . The 1960s was the decade d u r i n g which Taiwan implemented major economic reforms t h a t encouraged i n d u s t r i e s t o be more o u t w a r d - o r i e n t e d . The changes i n t r a d e and i n d u s t r i a l p o l i c i e s produced s p e c t a c u l a r r e s u l t s : r e a l GNP growth d u r i n g the decade approached double d i g i t f i g u r e s and the growth i n m a n u f a c t u r i n g p r o d u c t i o n reached 20%. Because the i n d u s t r i a l e x p a n s i o n o c c u r e d p r i m a r i l y i n l a b o u r - i n t e n s i v e i n d u s t r i e s , the demand f o r u n s k i l l e d l a b o u r and s e m i - s k i l l e d workers i n c r e a s e d r a p i d l y . At f i r s t , t he impact of r a p i d i n d u s t r i a l i z a t i o n on a g r i c u l t u r e was modest, but by the l a t e 1960s the r u r a l l a b o u r market became v e r y t i g h t and a g r i c u l t u r a l wages began t o i n c r e a s e r a p i d l y as many farmers found i t more p r o f i t a b l e t o ta k e employment i n the 7 i n d u s t r i a l s e c t o r than t o remain f u l l - t i m e i n a g r i c u l t u r e . Because i n d u s t r i a l growth i n Taiwan was not o n l y r a p i d but a l s o g e o g r a p h i c a l l y d i s p e r s e d , many farmers were a b l e t o p a r t i c i p a t e i n i n d u s t r i a l employment w i t h o u t m i g r a t i n g t o c i t i e s . The r i s e i n wages and c o n t i n u e d d e p r e s s e d p r i c e s f o r a g r i c u l t u r a l p r o d u c t s made i t i n c r e a s i n g l y l e s s p r o f i t a b l e f o r farm households t o remain i n a g r i c u l t u r e . C o n s e q u e n t l y i n the l a t e 1960s workers began t o s h i f t out of a g r i c u l t u r e , e i t h e r t h r ough m i g r a t i o n or t h r o u g h the r e a l l o c a t i o n of l a b o u r time from t h e i r farm work t o non- a g r i c u l t u r a l employment, so t h a t i n 1972 the number of farm workers had d e c l i n e d t o 94% of the 1967 l e v e l 5 . In t h i s p e r i o d , farmers a d j u s t e d by r e d u c i n g l a b o u r i n t e n s i v e a g r i c u l t u r a l a c t i v i t i e s and double c r o p p i n g . Animal husbandry d e c l i n e d 6 and the a r e a p l a n t e d i n r i c e had f a l l e n i n 1972 t o 94% of the 1968 l e v e l 7 . The m u l t i p l e c r o p index f e l l from 190 i n 1968 t o 175 i n 1 972 8 . A g r i c u l t u r a l growth was s t a l l e d . F i n a l l y , i n 1969, the government acknowledged the need f o r some fundamental changes i n i t s p o l i c i e s 9 . I t abandoned the f o u r t h a g r i c u l t u r a l p l a n (1969-72) s i n c e s u r p l u s e x t r a c t i o n and l a b o u r - i n t e n s i v e growth were no l o n g e r a p p r o p r i a t e 1 0 . The p r i c e s of r i c e and f e r t i l i z e r were a d j u s t e d t o t u r n the terms of t r a d e i n f a v o u r of f a r m e r s , and c o n s e q u e n t l y the r a t i o of o f f i c i a l p r i c e t o the market p r i c e c l i m b e d from 75 i n 1968 t o 108 i n 1 9 7 3 1 1 . To 8 d e a l w i t h the problem of r u r a l l a b o u r s h o r t a g e s a g r i c u l t u r a l r e s e a r c h was r e d i r e c t e d towards d e v e l o p i n g l a b o u r - s a v i n g t e c h n i q u e s . A major e f f o r t was made t o f i n d ways t o mechanize r i c e c u l t i v a t i o n . J o i n t p r o j e c t s i n v o l v i n g experiment s t a t i o n s , machine p r o d u c e r s , i m p o r t e r s , Farmers' A s s o c i a t i o n s and farmers were i n i t i a t e d t o d e v e l o p the a p p r o p r i a t e machines. Research t o d e v e l o p r e g i o n a l s p e c i a l i z a t i o n i n p r o d u c t i o n was a l s o i n i t i a t e d . By 1972-73 the r e s u l t s of p u b l i c and p r i v a t e r e s e a r c h became a v a i l a b l e . L o c a l l y made a p p r o p r i a t e machines were i n t r o d u c e d and t h e i r a d o p t i o n was p r o m o t e d 1 2 . The e x t e n s i o n s e r v i c e s t r a i n e d f a r m e r s t o o p e r a t e and t o m a i n t a i n a g r i c u l t u r a l machines. Farmers A s s o c i a t i o n s as w e l l as p r i v a t e companies were i n v o l v e d i n the development of a s u p p l y network f o r machines and s p a r e - p a r t s . The a g r i c u l t u r a l o r g a n i z a t i o n s , p r e v i o u s l y l i m i t e d t o p r o v i d i n g s h o r t term l o a n s , were now a l l o w e d t o p r o v i d e t o farmers the medium term (7 yea r ) l o a n s needed f o r buy i n g machines. J o i n t o w n e r s hip of machines was promoted but p r o v e d not v e r y p o p u l a r . However, s p e c i a l i z a t i o n d e v e l o p e d as f a r m e r s w i t h machines began to g i v e 'custom s e r v i c e s ' 1 3 f o r th o s e w i t h o u t machines (a development t h a t was unexpected but n e v e r t h e l e s s welcomed by p l a n n e r s ) . A g r i c u l t u r a l machines were used p r i m a r i l y as a s u b s t i t u t e f o r l a b o u r d u r i n g peak seasons of the r i c e p r o d u c t i o n . R i c e t r a n s p l a n t e r s , r i c e combines, d r y e r s and t h r e s h e r s became a v a i l a b l e i n 1970 and by 1980 a 9 t o t a l of 110538 r i c e - r e l a t e d machines were i n u s e 1 4 . At the same t i m e , r i c e v a r i e t i e s which were a p p r o p r i a t e f o r me c h a n i c a l h a n d l i n g were extended and n u r s e r i e s were s t a r t e d t o s u p p l y boxed r i c e s e e d l i n g s . The use of h e r b i c i d e s was promoted t o reduce the need f o r weeding, an e x t r e m e l y l a b o u r - i n t e n s i v e and p h y s i c a l l y demanding a c t i v i t y . D e v e l o p i n g l a b o u r - s a v i n g t e c h n o l o g y f o r the n o n - r i c e c r o p s proved more d i f f i c u l t ; e f f o r t s were i n s t e a d d i r e c t e d t o a r e d u c t i o n of l o s s e s from n a t u r a l d i s a s t e r , d i s e a s e and p r i c e i n s t a b i l i t y . Improved c u l t i v a t i o n t e c h n i q u e s were promoted and h e r b i c i d e r e s i s t a n t s t r a i n s were developed. Where p o s s i b l e , typhoon p r o t e c t i o n methods and more v i l l a g e - w i d e p e s t and d i s e a s e c o n t r o l were promoted. To p r o v i d e g r e a t e r p r i c e s t a b i l i t y , f a r m e r s , p r o c e s s o r s and e x p o r t e r s were encouraged t o s i g n s e a s o n a l c o n t r a c t s . To improve the r e g i o n a l d i s t r i b u t i o n of income, an e f f o r t was made t o make s l o p e l a n d p r o d u c t i o n more p r o d u c t i v e and p r o f i t a b l e 1 5 . In the 1970s, farmers a l s o had t o a d j u s t t o changes i n consumer demand. As per c a p i t a income i n c r e a s e d , the demand f o r n o n - s t a p l e food a l s o i n c r e a s e d , and Taiwan's farmers responded t o these changes. Thus, f r u i t p r o d u c t i o n was 22% and v e g e t a b l e p r o d u c t i o n 48% lower i n 1972, but r i c e p r o d u c t i o n 4% and sweet p o t a t o p r o d u c t i o n 177% h i g h e r i n 1972 than i n 1 9 8 0 1 6 . The adjust m e n t s i n p r o d u c t i o n were a l s o i n response t o s h i f t s i n the e x p o r t p a t t e r n . F r e s h 10 f r u i t e x p o r t q u a n t i t y was 157% (banana 125%, canned p i n a p p l e 175%) and sugar 27% h i g h e r i n 1972, but v e g e t a b l e e x p o r t s were 45% lower i n 1972 than i n 1980. R i c e e x p o r t s a l s o i n c r e a s e d . In 1972, 1% of the r i c e p r o d u c t i o n was e x p o r t e d ; by 1980, 17% of i t s p r o d u c t i o n was e x p o r t e d 1 7 . The e x p a n s i o n i n r i c e e x p o r t s o c c u r r e d d e s p i t e the f a c t t h a t r i c e p r o d u c t i o n i n 1980 was s l i g h t l y lower than t h a t i n 1972. C l e a r l y , domestic consumption p a t t e r n s had changed d r a m a t i c a l l y . D e s p i t e these a d j u s t m e n t s , a g r i c u l t u r a l growth between 1972 and 1979, a t 3.5% per y e a r , s t i l l compared u n f a v o u r a b l y t o the 4.5% per year growth r a t e e s t a b l i s h e d d u r i n g 1951 - 1 9 7 0 1 8 . D i s s a t i s f i e d w i t h the lower r a t e of growth, Taiwan's a g r i c u l t u r a l p l a n n e r s , s e a r c h i n g f o r o t h e r ways t o a c c e l e r a t e a g r i c u l t u r a l growth, began t o v o i c e t h e i r b e l i e f t h a t the i n c r e a s i n g number of s m a l l and p a r t - t i m e farms, were the c h i e f c o n s t r a i n t s t o f a s t e r a g r i c u l t u r a l growth. We now t u r n t o examine these s t r u c t u r a l c h a r a c t e r i s t i c s . C. FACTOR MARKETS AND FARM ORGANIZATION The near d i s a p p e a r a n c e of l a r g e farms and the r i s e of p a r t - t i m e f a r m i n g can be e a s i l y documented. T a b l e 2.1 shows t h a t , between 1972 and 1980, s m a l l farms ( t h o s e w i t h l e s s than 1 h e c t a r e of l a n d ) c o n s i s t e n t l y a c c o u n t e d f o r over 70% of Taiwan's farms. In t h i s same p e r i o d the share o f l a r g e farms (those w i t h 2 or more h e c t a r e s ) d e c l i n e d from T a b l e 2.1: 1960, 1970, 1975, 1980 The NUMBER of HOUSEHOLDS CLASSIFIED by TYPE of WORK and by SIZE OF FARM 1960 % 1970 % 1975 1980 F u l l t i me (FT) 384501 48 276959 30 157043 18 91209 10 With s i de1i ne: (PT) 423099 52 639007 70 729012 82 800054 90 - m a i n l y farm (PT.A) 241060 30 371434 4 1 422 131 48 306335 35 - ma 1n1y s i d e l i ne (PT.NA) 182039 22 267573 29 306881 34 493719 55 T o t a l 807600 100 915966 100 886055 100 891263 100 l e s s than 1 ha (S) 515817 66 629063 72 618119 71 633708 73 1 ha and l e s s than 2 ha (M) 183751 24 176216 20 181464 2 1 174020 20 2 ha and more (L) 76434 10 741 1 19 8 66817 8 64539 7 T o t a l c u l t i v a t i n g 776002 100 879398 100 866400 100 872267 100 non-cu111 v a t i ng 31598 36568 19655 18996 - Source: Census d a t a T a b l e 2 .2: FARM HOUSEHOLDS by TYPE of WORK and SIZE i n 1980 and 1975 Number of Households per Type % Households per S i z e 'o Households per Work Type Year S i z e T o t a l FT % PT . A % PT.NA % T o t a l FT PT.A PT.NA T o t a l FT PT.A PT.NA 1980 -1 ha 633708 45054 5 170159 2 0 418445 48 100 7 27 66 73 50 56 87 1-2 ha 174020 28046 3 94556 1 1 51418 6 100 16 54 30 20 31 31 1 1 2+ ha 64539 16302 2 39067 4 9220 1 100 25 61 14 7 19 13 2 1980 C u l t i v a t o r s 872267 89402 303782 479083 100 10 35 55 100 100 100 100 1975 -1 ha 618119 80436 9 267599 31 270084 31 100 13 43 44 71 52 64 93 1-2 ha 181464 50650 6 112937 13 17877 2 100 28 62 10 21 33 27 6 2+ ha 66817 23981 3 39331 5 3505 .04 100 36 59 5 8 15 9 1 1975 C u l t i v a t o r s 866400 155067 419867 291466 100 18 48 34 100 • 100 100 100 Source: A g r i c u l t u r a l Census, 1980, 1975 Note: FT f u l l - t i m e farmer ( a l l f a m i l y income comes from the farming a c t i v i t y ) PT.A : p a r t - t i m e , mainly farmer (more than h a l f of the f a m i l y income comes from the farming a c t i v i t y ) PT.NA: p a r t - t i m e , mainly s i d e l i n e ( l e s s than h a l f of the f a m i l y income comes from the fa r m i n g a c t i v i t y ) 12 10% t o 7%. However, the most d r a m a t i c change was the r a p i d e x p a n s i o n of p a r t - t i m e f a r m i n g 1 9 . Between 1970 and 1980, the p r o p o r t i o n of farms c l a s s i f i e d as ' f u l l - t i m e ' ( d e f i n e d as p r o v i d i n g more than h a l f of the f a m i l y income) d e c l i n e d from 71% t o 45%. T a b l e s 2.1 and 2.2 a l s o document another w i d e l y o b s e r v e d phenomenon i n Taiwanese a g r i c u l t u r e , the s t r o n g i n v e r s e r e l a t i o n s h i p between farm s i z e and p a r t - t i m e f a r m i n g . As the farm s i z e d e c l i n e s , p a r t - t i m e f a r m i n g i n c r e a s e s . For example, i n 1980 66% of s m a l l farmers were a l s o p a r t - t i m e farmers w h i l e o n l y 14% of the l a r g e farmers were p a r t - t i m e f a r m e r s . The d a t a a l s o s u g g e s t s t h a t p a r t - t i m e f a r m i n g has i n c r e a s e d f o r farms of a l l s i z e s over ti m e . The government i s p a r t i c u l a r l y c o n c erned about the growing number of s m a l l p a r t - t i m e f a r m e r s . But the d i s t r i b u t i o n of farm households i s i n f l u e n c e d by many f a c t o r s . Because developments i n the l a b o u r and l a n d markets have p l a y e d a p a r t i c u l a r l y i n f l u e n c i a l r o l e , the d i s c u s s i o n below s h a l l f o c u s on t h e s e two markets of Taiwan. C.1 Farm s i z e and the l a n d m a r k e t s 2 0 How l a n d i s o r g a n i z e d i s d etermined i n p a r t by f o r c e s o u t s i d e the f a r m i n g h o u s e h o l d s . Below we c o n s i d e r some of the e x t e r n a l f a c t o r s : the l a n d laws, the i n h e r i t a n c e customs and t h e demand f o r l a n d f o r r e s i d e n t i a l and c ommercial use. 1 3 The l a n d laws t h a t a f f e c t the d i s t r i b u t i o n of l a n d are the 1949 R e n t - R e d u c t i o n Act (RRA) and the 1953 L a n d - t o - T i l l e r Act (LTT). The RRA not o n l y reduced the r e n t but a l s o gave t e n a n t s s t r o n g r i g h t s on the l a n d they c u l t i v a t e . Rent i s s e t a t 37.5% of the 1948 y i e l d 2 1 . The law a l s o s t i p u l a t e s a minimum s i x year l e a s e 2 2 , the r i g h t t o renew the the c o n t r a c t i f f a r m i n g i s the t e n a n t ' s o n l y s ource of income and i f the l a n d l o r d does not i n t e n t t o c u l t i v a t e the l a n d h i m s e l f 2 3 , and t h a t the c o n t r a c t be r e g i s t e r e d w i t h the government 2". Furthermore a t e n a n t who has worked a p i e c e of l a n d f o r 8 y e a r s has the r i g h t t o a p p l y t o the l o c a l l a n d commission t o purchase the l a n d a t i t s s t a t u t o r y v a l u e 2 5 . The purposes of the L a n d - t o - T i l l e r Act were t o d i s t r i b u t e the l a n d ownership t o the c u l t i v a t o r s and t o p r e v e n t ownership c o n c e n t r a t i o n from r e o c c u r i n g . Under the A c t , f a r m e r - t e n a n t s were a l l o w e d t o buy the l a n d they c u l t i v a t e d w i t h t h e i r f a m i l y . L a n d l o r d s were a l l o w e d to r e t a i n 3 c h i a (=2.91 ha) of paddy l a n d or 6 c h i a of dry l a n d f o r c u l t i v a t i o n or l e a s e 2 6 . However, i f the r e t a i n e d l a n d i s l e a s e d , the LTT a c t a l l o w s the t e n a n t s t o ask the Land Commission f o r p e r m i s s i o n t o buy the l a n d 2 7 . C u l t i v a t o r s were a l l o w e d t o own more than 3 c h i a of paddy l a n d , but a l l f a m i l i e s who bought l a n d under the L a n d - t o - T i l l e r Act c o u l d l o s e t h e i r l a n d t o the government w i t h o u t compensation i f they r e n t out the l a n d 2 8 . 14 T a b l e 2 .3: OWNERSHIP OF THE FARM LAND Year f u l l p a r t f u l l Household P o p u l a t i o n Area Area Owner owner ten p er HH (1) (2) (3) (4) (5) (6) (%) (%) (%) (#) (#) (Ha) (Ha) 1 947 32 28 41 553308 3578175 834000 1.51 1 960 64 21 1 4 785592 5373375 869223 1.11 1 972 78 12 10 879526 5947325 898603 1 .02 1 976 82 9 9 867547 5563354 919680 1 .06 1 979 85 7 8 898341 5638810 915393 1 .02 1980 83 10 7 872267 5287596 907353 1 .04 • (1) (2) (3) (4) (5) Source : PDAF A g r i c u l t u r a l Yearbook Note: (1) p e r c e n t a g e f u l l l a n d owners of the households (2) p e r c e n t a g e p a r t owners (3) p e r c e n t a g e f u l l t e n a n t s (4) number of f a r m i n g households (5) p o p u l a t i o n on the farms (6) a r e a per f a r m i n g h o u s e h o l d The l a n d r e f o r m was v e r y s u c c e s f u l . Tenancy (except where the l a n d l o r d i s the s t a t e ) has v i r t u a l l y been e l i m i n a t e d . T able 2.3 shows t h a t the share of o w n e r - c u l t i v a t o r s i n t o t a l farm h o u s e h o l d s i n c r e a s e d from 32% i n 1947 t o 78% i n 1972. w h i l e the share of t e n a n t s d e c l i n e d from 41% i n 1947° t o 7% i n 1980. Because l a n d was d i s t r i b u t e d over so many h o u s e h o l d s , the average farm s i z e a l s o d e c l i n e d . In 1980 the average farm s i z e was 1.02 h e c t a r e , and o n l y 7% of farm households o p e r a t e d farms l a r g e r than 2 ha. S i n c e the e a r l y 1970s the ownership p a t t e r n has remained s t a b l e ( t a b l e 2.3) and so has the s i z e d i s t r i b u t i o n of management u n i t s . I t would appear t h a t the l a n d r e f o r m 1 5 laws not o n l y have p r e v e n t e d r e c o n c e n t r a t i o n of ownership, they may a l s o have p r e v e n t e d the l a n d market from p l a y i n g i t s p r o p e r a l l o c a t i v e r o l e . The main problems which the l a n d r e f o r m laws have c r e a t e d are the f o l l o w i n g . Under the p r e s e n t laws, the l e a s i n g of l a n d i s p e r c e i v e d t o be h i g h l y r i s k y 2 9 . Farmers f e a r t h a t they may l o o s e o w n e r s h i p i f they r e n t out l a n d under a f o r m a l r e n t a l c o n t r a c t f o r l o n g e r than one y e a r . Thus l a n d i s r e n t e d out at most f o r one year and u s u a l l y u n o f f i c i a l l y 3 0 . T h i s means t h a t f a r m e r s who have found n o n - a g r i c u l t u r a l employment may n e v e r t h e l e s s c o n t i n u e t o farm t h e i r l a n d on a p a r t - t i m e b a s i s r a t h e r than r e n t out the l a n d and r i s k the l o s s of o w n e r s h i p 3 1 . S i n c e 1978, t o encourage more l a n d t o e n t e r the r e n t a l market, the government has i n t r o d u c e d s e v e r a l new i n s t i t u t i o n a l arrangements t o c i r c u m v e n t the l a n d r e f o r m laws. One arrangement a l l o w s the l a n d owner t o a r r a n g e f o r another farmer t o o p e r a t e h i s l a n d as a ' c o n t r a c t f a r m e r ' . T h i s g e t s around the l a n d r e f o r m laws because, s t r i c t l y s p e a k i n g , a 'farming c o n t r a c t 1 i s not a r e n t a l c o n t r a c t 3 2 . T a b l e 2.3 s u g g e s t s t h a t these new arrangements may a l r e a d y have had an e f f e c t . For the f i r s t t i m e , the share of part-owner farmers has been on the r.ise. But t a b l e 2.4 shows t h a t d u r i n g 1977-80, newly r e n t i n g or c o n t r a c t i n g h o useholds a r e but a s m a l l f r a c t i o n of t o t a l farm h o u s e h o l d s , s u g g e s t i n g t h a t the r e n t a l market i s s t i l l v e r y t h i n even w i t h the i n t r o d u c t i o n of the new c o n t r a c t i n g a r r a n g e m e n t s . For many r e a s o n s , l a n d s a l e s a r e a l s o r a r e . B e f o r e a p i e c e of l a n d can be s o l d , p e r m i s s i o n must f i r s t be o b t a i n e d from the l a n d commission. The underdeveloped mortgage market and the s t r i n g e n t c o n d i t i o n s imposed on mortgages a l s o d i s c o u r a g e l a n d s a l e s 3 3 . B e s i d e the i m p e r f e c t i o n s i n the l a n d markets, t h e r e are o t h e r p r e s s u r e s t h a t keep farms s m a l l i n Taiwan. Chinese i n h e r i t a n c e customs d i v i d e l a n d e q u a l l y among male h e i r s 3 " . F u r t h e r m o r e , r a p i d i n d u s t r i a l growth has s t e a d i l y taken b i t s of l a n d from farms l o c a t e d near urban a r e a s . The demand f o r r e s i d e n t i a l c o n s t r u c t i o n has a l s o put p r e s s u r e on farm l a n d 3 5 . With the c o s t of l a n d r e c l a m a t i o n and s l o p e l a n d development v e r y h i g h , v e r y l i t t l e l a n d i s b e i n g added. The farm s i z e depends on .the r a t e of l o s s of farm l a n d and of f a r m i n g h o u s e h o l d s . From 1972 t o 1976, farm l a n d and farm households i n c r e a s e d more or l e s s p r o p o r t i o n a l l y ( t a b l e 2.3). But between 1976 and 1980, farm l a n d has d e c l i n e d more r a p i d l y than has the number of farm h o u s e h o l d s , so farm s i z e has d e c l i n e d . In summary, t h r e e major f a c t o r s have i n f l u e n c e d farm s i z e i n Taiwan: the l a n d r e f o r m l a w s , the i n h e r i t a n c e custom and the i n c r e a s e d demand f o r farm l a n d f o r n o n - a g r i c u l t u r a l uses. The l a n d ref o r m laws have imposed severe c o n s t r a i n t s on the o p e r a t i o n of the l a n d market, making i t d i f f i c u l t t o i n c r e a s e farm s i z e f o r management purposes. The i n h e r i t a n c e Table 2.4: CHANGES IN LAND HOLDINGS BY SIZE OF FARM AND BY REASON in 1975 Size Purchase Rent In Sold Rent Out Total Number HH HA HH HA HH HA HH HA HH % -1 ha 2882 339 866 325 5488 1826 542 303 558264 65 1-2 ha 1838 707 683 377 1559 799 322 ' 160 197324 23 2+ ha 1023 801 362 335 823 387 99 76 110812 13 Total 5743 2247 1811 1037 7870 3022 963 539 866400 % . 77 . 30 .24 .14 1 .06 .41 . 13 .07 100 in the 1977-80 Period (3 years together) Size Purchase Rent i ng Contract Sold Rent Out Contract Total Number HH HH HH ' HH HH HH HH % -1 ha 25516 2907 2909 8269 781 4845 633708 72 1-2 ha 5061 683 646 1767 225 831 4845 20 2+ ha 1976 317 257 1161 134 404 64539 8 Total 32553 3297 382 1 10996 1 140 6080 872267 100 % 3 . 73 .45 .44 1 . 26 • 13 . 70 Source: Agricultural Census, 1975, 1980 b HH: households c HA: area d % : percent of the total number of households (or area) 18 custom encourages l a n d f r a g m e n t a t i o n . F i n a l l y , between 1976 and 1980, because of i n c r e a s e d demand f o r i n d u s t r i a l and r e s i d e n t i a l l a n d , l a n d was l e a v i n g a g r i c u l t u r e a t a f a s t e r r a t e than farm h o u s e h o l d s . The consequences f o r the farm s e c t o r a r e thought t o be t h e s e : (1) o t h e r t h i n g s e q u a l , a net d e c r e a s e i n l a n d w i l l mean slower a g r i c u l t u r a l growth i n the f u t u r e , (2) the more u n i f o r m d i s t r i b u t i o n of l a n d i s l i k e l y t o c o n t r i b u t e t o a more e q u a l d i s t r i b u t i o n of income i n r u r a l Taiwan, and (3) the i n c r e a s i n g number of s m a l l farms may r e s u l t i n p r o d u c t i o n i n e f f i c i e n c y i f t h e r e a r e s c a l e ecomomies i n a g r i c u l t u r e . One purpose of t h i s study i s t o shed l i g h t on the t h i r d consequence. To a l l e v i a t e some of the problems c r e a t e d by the 1949 and 1953 l a n d r e f o r m l a w s , s e v e r a l changes have been pr o p o s e d . The e x p e r i m e n t a t i o n w i t h new r e n t a l arrangements, such as c o n t r a c t f a r m i n g , has a l r e a d y been mentioned. Another p r o p o s a l i s t o r a i s e the amount of l a n d t h a t farm h o u s e h o l d s may own, w h i l e p l a c i n g a lower l i m i t on farm . s i z e . A law t o p r o h i b i t l a n d s p e c u l a t i o n , a c a p i t a l g a i n s t a x on l a n d , and a heavy p u n i t i v e t a x on u n c u l t i v a t e d farm l a n d have a l s o been s u g g e s t e d 3 6 . Another p r o p o s a l i s t o f a c i l i t a t e l a n d s a l e s by making l o n g term c r e d i t more a c c e s s i b l e . The i n t e n t of a l l t h e s e s u g g e s t i o n s i s t o i n c r e a s e the number of l a r g e f u l l - t i m e farms. L a t e r c h a p t e r s s h a l l a n a l y z e the p a t t e r n of p r o d u c t i o n by the s i z e 19 of farm and the degree of farm ho u s e h o l d s ' p a r t i c i p a t i o n i n f a r m i n g . H o p e f u l l y , the a n a l y s i s w i l l suggest some of the l i k e l y impacts of l a n d o w n e r s h i p c o n s o l i d a t i o n . C.2 P a r t - t i m e f a r m i n g , h o u s e h o l d l a b o u r s u p p l y and the r u r a l l a b o u r market Of the many f a c t o r s t h a t have i n f l u e n c e d the development and the o r g a n i z a t i o n of p a r t - t i m e f a r m i n g i n Taiwan, f o u r deserve s p e c i a l a t t e n t i o n : the n a t u r e of Taiwan's l a b o u r market, the extended f a m i l y system, the i n c r e a s e d s p e c i a l i z a t i o n and d i v i s i o n of l a b o u r i n a g r i c u l t u r a l p r o d u c t i o n made p o s s i b l e by new t e c h n o l o g i e s , and the growing demand f o r r u r a l l a b o u r from the n o n - a g r i c u l t u r a l s e c t o r s 3 7 . Note t h a t i n t h i s . s t u d y a p a r t - t i m e farm household i s d e f i n e d as one t h a t e a r n s a t l e a s t 50% of i t s income from o f f - f a r m s o u r c e s (or a l l o c a t e s a t l e a s t 25% of i t s l a b o u r t o o f f - f a r m a c t i v i t i e s ) , and o f f - f a r m s o u r c e s ( a c t i v i t i e s ) a r e not n e c e s s a r i l y n o n - a g r i c u l t u r a l s o u r c e s ( a c t i v i t i e s ) . In o t h e r words, o f f - f a r m employment may i n v o l v e working on someone e l s e ' s farm. Taiwan's l a b o u r market works r e a s o n a b l y w e l l , w i t h no s i g n of the d i s t o r t i o n s or i m p e r f e c t i o n s t h a t can sometimes be observed i n o t h e r l e s s d e v e l o p e d c o u n t r i e s . The i s l a n d i s s e r v e d by a w e l l o r g a n i z e d t r a n s p o r t system (made up of r a i l r o a d s , highways and an e x t e n s i v e f e e d e r road system, and h a v i n g a l a r g e bus s y s t e m ) , perhaps t h e best i n 2 0 A s i a a f t e r Japan. I t a l s o has an e f f i c i e n t communication system. Newspapers, r a d i o s and t e l e v i s i o n s a r e a l l w i d e l y a v a i l a b l e i n a l l p a r t s of the i s l a n d . There a r e no r e s t r i c t i o n s on movements w i t h i n the i s l a n d . Minimum wage laws e x i s t but are not s t r i c t l y e n f o r c e d except i n a few a r e a s (e.g. e x p o r t p r o c e s s i n g z o n e s ) , so e f f e c t i v e l y they do not e x i s t f o r most of the economy. In b r i e f , l a b o u r i s m o b i l e , news of employment o p p o r t u n i t i e s t r a v e l s f a s t and r u r a l workers are r e s p o n s i v e t o new economic o p p o r t u n i t i e s . Because of s t r o n g f a m i l y t i e s and a t r a d i t i o n a l r e s p e c t f o r the e l d e r l y , the t y p i c a l r u r a l h o u s e h o l d i n 'Taiwan today i s s t i l l composed of t h r e e or f o u r g e n e r a t i o n s 3 8 . Young a d u l t s remain at home u n t i l m a r r i a g e , and even a f t e r m a r r i a g e , a t l e a s t one son r e m a i n s i n the p a r e n t ' s h o u s e h o l d . T h i s h o u s e h o l d s t r u c t u r e p r o v i d e s f o r the c a r e of the e l d e r l y as t h e r e a r e no p e n s i o n p l a n s . In the p a s t f o u r decades, the number of p r i m a r y and secondary s c h o o l s has expanded r a p i d l y i n r u r a l Taiwan. T r a d i t i o n a l l y , Taiwanese have p l a c e d a h i g h v a l u e on e d u c a t i o n so t h a t , when r u r a l income improved and made i t p o s s i b l e f o r more p a r e n t s t o send c h i l d r e n t o s c h o o l , e n r o l l m e n t i n c r e a s e d r a p i d l y and those a t t e n d i n g s c h o o l s a l s o remained l o n g e r i n the s c h o o l system. Thus, i n a t y p i c a l extended f a m i l y , the younger members a r e much b e t t e r educated than members of an o l d e r g e n e r a t i o n . The younger members, t h e r e f o r e , have b e t t e r a c c e s s t o economic 21 o p p o r t u n i t i e s o u t s i d e the f a m i l y farm. However, many of those who have found employment o u t s i d e the f a m i l y farm have c o n t i n u e d t o be p a r t of the farm h o u s e h o l d . In t h i s f a s h i o n , the extended f a m i l y system has c o n t r i b u t e d t o the i n c r e a s e i n the share of farm households w i t h income from o f f - f a r m a c t i v i t i e s . Another i n f l u e n c e on the development of p a r t - t i m e farming has been the growth i n 'custom s e r v i c e s ' p r o v i d e d by farmers who s p e c i a l i z e i n one or s e v e r a l a s p e c t s of c r o p p r o d u c t i o n 3 9 . T h i s type of s p e c i a l i z a t i o n has always e x i s t e d i n r u r a l Taiwan. For example, i n t h e 1960s, groups of farmers used to t r a v e l up the i s l a n d (from South t o North) d u r i n g the t r a n s p l a n t i n g season h e l p i n g w i t h the t r a n s p l a n t i n g of the r i c e s e e d l i n g s . However, i n the 1970s the importance of 'custom s e r v i c e s ' i n c r e a s e d s i g n i f i c a n t l y as many farmers i n v e s t e d i n s p e c i a l i z e d machines and equipment and began t o o f f e r t h e i r s e r v i c e s t o tho s e who d i d n ' t have them. Thus, i t became p o s s i b l e t o h i r e one farmer t o prepare the f i e l d w i t h a t i l l e r , a second t o t r a n s p l a n t the r i c e s e e d l i n g w i t h a t r a n s p l a n t e r and a t h i r d t o harvest- the r i c e w i t h a h a r v e s t e r or combine. The system has s t a r t e d t o go i n t o o t h e r a c t i v i t i e s i n re s p o n s e t o the i n c r e a s i n g s o p h i s t i c a t i o n of the p r o d u c t i o n t e c h n o l o g y . For example, i n s e c t i c i d e use i s expanding and w i t h i t the s u p p l y of s p e c i a l i z e d w o r k e r s " 0 and t h e i r equipment, and o t h e r a c t i v i t i e s such as p r u n i n g a l s o i n c r e a s i n g l y need 22 s p e c i a l i z e d knowledge. T h i s e x p a n s i o n of the 'custom s e r v i c e s ' system i n t r o d u c e s an element of s p e c i a l i z a t i o n of a c t i v i t y and may become i n c r e a s i n g l y i m p o r t a n t . These members of the farming community, by s p e c i a l i z i n g i n t h e i r a g r i c u l t u r a l a c t i v i t y , d i s t r i b u t e the g a i n s from s p e c i a l i z a t i o n (human c a p i t a l ) a c r o s s farms and a l s o i n c r e a s e the d i v i s i b i l i t y of l a r g e p i e c e s of farm equipment. Thus the development of a market f o r 'custom s e r v i c e s ' has i n c r e a s e d p a r t - t i m e f a r m i n g by p r o v i d i n g o f f - f a r m a g r i c u l t u r a l work f o r one group of f a r m e r s w h i l e a l l o w i n g another group of farmers t o c o n t i n u e t o o p e r a t e t h e i r farms w h i l e engaged i n f u l l - t i m e employment o u t s i d e of agr i c u l t u r e . Perhaps the most i m p o r t a n t i n f l u e n c e on the development of p a r t - t i m e f a r m i n g has been the r a p i d i n c r e a s e i n the demand f o r r u r a l l a b o u r from the n o n - a g r i c u l t u r a l s e c t o r " 1 . S i n c e the e a r l y 1970s, r a p i d i n d u s t r i a l development has g r e a t l y expanded the o p p o r t u n i t i e s f o r y e a r - r o u n d employment f o r r u r a l w o r k e r s , p a r t i c u l a r l y young w o r k e r s . The expansion of n o n - a g r i c u l t u r a l a c t i v i t i e s was not c o n c e n t r a t e d o n l y i n the l a r g e c i t i e s but has o c c u r r e d i n a d e c e n t r a l i z e d p a t t e r n , so t h a t many r u r a l workers c o u l d s w i t c h o c c u p a t i o n w i t h o u t c h a n g i n g t h e i r r e s i d e n c e . I t i s a l s o i m p o r t a n t t o note t h a t the n o n - a g r i c u l t u r a l s e c t o r p r o v i d e s i t s workers on the average w i t h more days of employment (27 days per m o n t h 4 2 ) than t h e a g r i c u l t u r a l 23 s e c t o r (16 days per month). However, the n o n - a g r i c u l t u r a l s e c t o r tends to h i r e the young and the b e t t e r educated, and i n d e e d , w i t h i n d u s t r i a l i z a t i o n , f a r m i n g i n Taiwan has become i n c r e a s i n g l y the o c c u p a t i o n of the o l d and the l e s s e d u c a t e d . T a b l e s 2.5 and 2.6 compare the age and the e d u c a t i o n d i s t r i b u t i o n s of workers i n a g r i c u l t u r e w i t h those i n the economy as a whole. They show t h a t Taiwan's a g r i c u l t u r e a b s o r b s a d i s p r o p o r t i o n a t e share of the o l d e r and the l e s s educated w o r k e r s . In 1980 o n l y 26% of the male l a b o u r f o r c e i n a g r i c u l t u r e had e d u c a t i o n beyond the p r i m a r y s c h o o l , w h i l e t h i s p r o p o r t i o n i n the t o t a l male l a b o u r f o r c e was 49%. Among women w o r k e r s , o n l y 10% of those i n a g r i c u l t u r e had e d u c a t i o n beyond the p r i m a r y s c h o o l , w h i l e the p r o p o r t i o n i n the t o t a l female l a b o u r f o r c e was 44%. In 1980, 60% of the male l a b o u r f o r c e i n a g r i c u l t u r e was over f o r t y y e a r s of age as compared t o 42% i n the t o t a l l a b o u r f o r c e . Among female workers the age d i f f e r e n c e was even more pronounced. In 1980, 56% of the female l a b o u r f o r c e i n a g r i c u l t u r e was over 40 y e a r s of age as compared t o o n l y 25% i n the t o t a l l a b o u r f o r c e . That i t i s the young, those between the ages of 20 and 44, who a r e most m o b i l e , i s comfirmed by the a n n u a l f l o w between o c c u p a t i o n s " 3 . For example, i n the mid 1970s, when the o i l shock s e v e r e l y d e p r e s s e d i n d u s t r i a l , a c t i v i t i e s , t h e r e was a s u b s t a n t i a l net f l o w of workers i n the age group 20-44 from n o n - a g r i c u l t u r e 24 to a g r i c u l t u r e . I t appears t h a t a g r i c u l t u r e i s the r e s i d u a l employer and t h a t workers move between i t and the n o n - a g r i c u l t u r a l s e c t o r s a c c o r d i n g t o economic c o n d i t i o n s . However, l a b o u r m o b i l i t y d e c l i n e s s i g n i f i c a n t l y once r u r a l workers r e a c h the age of 45. That the young have a b e t t e r chance of o b t a i n i n g o f f - f a r m employment i s a l s o c o n f i r m e d by the data i n t a b l e 2.7. In 1975 the share of workers above the age of 45 was 30% f o r a l l workers s u p p l i e d by f a r m i n g h o u s e h o l d s , 42% f o r f u l l - t i m e farm workers and 25% f o r p a r t - t i m e farm wor k e r s , and o n l y 5% f o r workers engaged i n o t h e r o c c u p a t i o n s ( i . e . f u l l - t i m e i n o f f - f a r m w ork). In o t h e r words, of those workers i n f a r m i n g households who d i d no work on the f a m i l y farm but were f u l l y engaged i n o t h e r a c t i v i t i e s , 95% were under the age of 45. And of tho s e farm f a m i l y members who worked p a r t on the farm and p a r t o f f the farm, 64% were between the ages of 20 and 40. In summary, f o u r f a c t o r s have i n f l u e n c e d the development of p a r t - t i m e f a r m i n g : a l a b o u r market t h a t works w e l l , the p e r s i s t e n c e of the extended f a m i l y system, t h e development of a market f o r 'custom s e r v i c e s ' and r a p i d and d e c e n t r a l i z e d i n d u s t r i a l growth. They have combined t o produce two ty p e s of p a r t - t i m e farm households i n Taiwan. The f i r s t t y p e i s an extended f a m i l y where some members ( u s u a l l y t h o s e over 45 y e a r s of age) work f u l l - t i m e on the f a m i l y farm and some (the younger ones) have o f f - f a r m 25 T a b l e 2.5: DISTRIBUTION OF WORKERS IN AGRICULTURE AND IN THE ECONOMY BY AGE + 15 +20 +25 + 30 + 35 +40 +45 +50 + 55 +60 +65 TOT MALE % NUM 1 975 AG 1 1 7 8 1 1 1 3 15 12 9 8 5 1 949 EC 12 10 13 1 3 1 3 12 11 8 5 3 1 3473 1980 AG 5 6 10 7 1 1 13 14 13 1 0 7 3 828 EC 8 9 19 1 2 1 1 10 10 10 7 3 2 4262 FEMALE % NUM 1975 AG 12 1 1 9 1 3 1 5 15 13 8 4 1 0 544 EC 24 22 10 10 10 10 7 4 2 1 0 1705 1980 AG 4 7 10 1 0 1 3 15 17 13 8 3 0 439 EC 17 23 16 10 9 8 8 5 3 1 0 2266 Ta b l e 2.6: DISTRIBUTION OF WORKERS IN . ACRICULTURE AND IN THE ECONOMY BY LEVEL OF EDUCATION ATTAINED I L L I T SELF PRIMAR JUNIOR SENIOR VOCAT UNIV TOT MALE % NUM 1 975 AG 1 7 6 61 1 2 . 1 3 0 949 EC 8 4 51 1 6 5 9 6 3473 1980 AG 1 1 7 63 12 2 4 1 828 EC 4 3 45 19 8 1 1 1 1 4262 FEMALE % NUM 1975 AG 44 6 43 5 1 1 0 544 EC 22 3 46 1 3 4 9 4 949 1980 AG 32 9 54 4 .02 .05 439 EC 12 3 40 16 5 15 8 2265 Source : DGBAS, Labour survey d a t a Note: EC: economy AG: farm, f o r r e s t r y , l i v e s t o c k , f i s h e r y , h u n t i n g (does not i n c l u d e a g r i c u l t u r a l experiment s t a t i o n , Farmers' A s s o c i a t i o n and o t h e r s e r v i c e s workers) I L L I T : i l l i t e r a t e (no e d u c a t i o n ) SELF : S e l f educated (no e d u c a t i o n but l i t e r a t e ) PRIMAR: w i t h p r i m a r y e d u c a t i o n JUNIOR: w i t h j u n i o r h i g h SENIOR: w i t h s e n i o r h i g h VOCAT : w i t h s e n i o r v o c a t i o n a l UNIV: w i t h u n i v e r s i t y 26 Ta b l e 2.7: DISTRIBUTION OF FARM HOUSEHOLDS LABOUR BY EMPLOYMENT STATUS AND BY AGE (1975) NUMBER OF WORKERS(a ) AGE FULL PART FARM OTHER EMPLOY LABOUR FARM FARM TOTAL OCCUP TOTAL SUPPLY (1 ) (2) (3) (4) (5) (6) -14 52462 7056 59518 33595 931 13 98108 15- 155085 95496 250581 198990 449571 467156 20- 654305 571440 1225745 303192 1528937 1647289 45- 400813 194239 595052 16176 611228 674594 60- 99542 1 7924 117466 3279 120745 144354 65- 1 18124 9393 127517 4888 132405 156451 TOT AGE PERCENTAGES IN A WORKER CATEGORY (b) -15 4 1 3 6 3 3 15- 10 1 1 1 1 36 1 5 15 20- 44 64 52 54 52 52 45- 27 22 25 3 31 21 60- 7 2 5 1 4 5 65- 8 1 5 1 5 5 TOT 1 00 100 100 100 100 1 00 Sour c e : Census data 1975 No t e s : a: Number of farm h o u s e h o l d members i n the worker c a t e g o r y and i n the age b r a c k e t b: pe r c e n t a g e of the worker c a t e g o r y i n the age b r a c k e t (1) F u l l farm: number of farm household members who work f u l l - t i m e on t h e i r farm (2) P a r t farm: number of farm household members who work both on t h e i r farm and somewhere e l s e (3) Farm t o t a l : t o t a l number of farm h o u s e h o l d members who work on t h e i r farm (4) Other occup: farm household members who do not work on t h e i r farm (5) Employ t o t a l : T o t a l number of farm h o u s e h o l d members who have employment (6) l a b o u r s u p p l y : i n c l u d e s houseworkers 27 employment but a l l incomes a r e p o o l e d and a l l l i v e under the same r o o f . The second type i s a household whose members have f u l l - t i m e o f f - f a r m employment but work on t h e i r farm a f t e r work or on weekends. These p a r t - t i m e households are l i k e l y t o depend h e a v i l y on 'custom s e r v i c e s ' t o do much of the farm work, e s p e c i a l l y d u r i n g peak seasons and f o r a c t i v i t i e s which need s p e c i a l f a r m i n g s k i l l s . P a r t - t i m e f a r m i n g i s not a temporary phenomenon. Indeed i t i s l i k e l y t o become even more p o p u l a r . Less c e r t a i n a r e i t s consequences. The consequences f o r the farm s e c t o r a r e thought to be: (1) o t h e r t h i n g s b e i n g e q u a l , a net d e c r e a s e i n farm workers w i l l mean slower a g r i c u l t u r a l growth, (2) the a d d i t i o n of o f f - f a r m income i s l i k e l y t o c o n t r i b u t e t o a more.equal d i s t r i b u t i o n of income i n r u r a l Taiwan, and (3) the i n c r e a s i n g number of p a r t - t i m e farms may r e s u l t i n p r o d u c t i o n i n e f f i c i e n c y because of the r e s i d u a l i t y of the f a r m i n g a c t i v i t y . The second purpose of t h i s study i s t o shed l i g h t on the t h i r d consequence. D. STATEMENT OF THE PROBLEM The p r e c e d i n g e x a m i n a t i o n of the h i s t o r i c a l development of the a g r i c u l t u r a l s e c t o r and of the a g r i c u l t u r a l p o l i c i e s and the d e t a i l e d study of the f o r c e s i n the l a n d market and the l a b o u r market p r o v i d e the s e t t i n g f o r the p o l i c y q u e s t i o n which i s a d d r e s s e d i n t h i s s t u d y . 28 The a g r i c u l t u r a l development strategy adopted by Taiwan in the early 1950s was b u i l t upon two basic premises: (1) c u l t i v a t o r s are more productive when they own their land, and (2) there exists surplus labour in agriculture. Accordingly, through land reform, the government created a large class of owner-cultivators. To protect the small owner-cultivators from losing control of their land, regulations were included in the land reform laws that made i t extremely d i f f i c u l t to buy land or to increase the operational size of one's farm. Other a g r i c u l t u r a l development p o l i c i e s adopted in t h i s period generally promoted the absorption of rural labour. As conditions changed in Taiwan, the basic premises behind the a g r i c u l t u r a l development strategy became less v a l i d . By the late 1960s, labour was no longer in surplus in rural Taiwan. In fact, the rural labour market was extremely tight in the 1970s as agriculture and the non-agricultural sector both competed for rural workers. With labour costs r i s i n g farmers were induced to adopt labour saving technology. Growth in off-farm employment opportunities also converted a large number of farm households into part-time farmers. These developments, in turn, have encouraged policy makers to reconsider Taiwan's land p o l i c y . The land laws were designed to prevent the reemergence of large holdings. But such r e s t r i c t i o n s may no longer be useful. 29 Now the p e r c e p t i o n of the economic p l a n n e r s i s t h a t t h e r e may be too many s m a l l p a r t - t i m e f a r m e r s . V a r i o u s arguments a g a i n s t s m a l l and s m a l l p a r t - t i m e farmers and i n fa v o u r of l a r g e f u l l - t i m e f a r mers have been put f o r w a r d 1 " 1 . (1) S m a l l farms are b e l i e v e d t o be i n e f f i c i e n t s i n c e s c a l e economies i n the mechanized p r o d u c t i o n t e c h n o l o g y cannot be a c h i e v e d " 5 . (2) P a r t - t i m e farmers a r e b e l i e v e d t o be l e s s p r o d u c t i v e because of the r e s i d u a l a s p e c t of t h e i r f a r m i n g . Thus p a r t - t i m e farmers may be l e s s a t t e n t i v e t o t h e i r farm a c t i v i t y " 6 ( s i n c e i t i s now a secondary o c c u p a t i o n and o n l y a s m a l l f r a c t i o n of t h e i r h o u s e h o l d income comes from f a r m i n g ) , l e s s a b l e t o a d j u s t t o sudden needs f o r l a b o u r ( c a u s e d , f o r example by storms, d i s e a s e s and p e s t s ) , and more l i k e l y t o d i v e r t the more a b l e and p r o d u c t i v e f a m i l y members i n t o o f f - f a r m employment" 7. (3) L a r ge f u l l - t i m e f a r mers a r e b e l i e v e d t o be more r e s p o n s i v e t o changes i n the economic environment. Thus f o r the 1970s, i t i s thought t h a t the l a r g e farmers were the f i r s t t o responded t o the changes i n a g r i c u l t u r a l demand brought about by the r a p i d growth of income per c a p i t a i n Taiwan and t h a t they adopted l a b o u r - s a v i n g t e c h n o l o g y more r a p i d l y ( u n l i k e l e s s d e v e l o p e d c o u n t r i e s , t h e con c e r n of the Taiwanese a g r i c u l t u r a l p l a n n e r s i s not d i r e c t e d towards the a d o p t i o n speed of the green r e v o l u t i o n ; the green r e v o l u t i o n took p l a c e i n Taiwan i n the 1930s). 30 These arguments i n f a v o u r of a system of l a r g e f u l l - t i m e farms and i n fa v o u r of the d i f f e r e n t l a n d r e f o r m p r o p o s a l s a r e u s u a l l y d i s c u s s e d and p r e s e n t e d w i t h r e l a t i v e l y l i t t l e e m p i r i c a l e v i d e n c e " 8 , y e t the u n d e r l y i n g q u e s t i o n s a r e l a r g e l y e m p i r i c a l ones. Are s m a l l , and e s p e c i a l l y s m a l l p a r t - t i m e f a r m e r s l e s s p r o d u c t i v e than l a r g e f u l l - t i m e f a r m e r s ? Do economies of s c a l e e x i s t i n Taiwanese a g r i c u l t u r e ? D i d l a r g e f u l l - t i m e f a r m ers respond e a r l i e r t o the new t r e n d s i n demand f o r a g r i c u l t u r a l p r o d u c t s than s m a l l farms? D i d they adopt the l a b o u r s a v i n g machines e a r l i e r , or the newly a v a i l a b l e h e r b i c i d e ? What would be the immediate consequences f o r the a g r i c u l t u r a l markets of amalgamating s m a l l and s m a l l p a r t - t i m e farms i n t o l a r g e farms, each managed by one household who agreed t o farm f u l l - t i m e ? The f o l l o w i n g c h a p t e r s attempt t o p r o v i d e e m p i r i c a l l y - b a s e d answers t o t h e s e q u e s t i o n s by e s t i m a t i n g and comparing the p r o d u c t i v i t y and performance of farms by s i z e and by the degree t h a t farm households p a r t i c i p a t e i n o f f - f a r m a c t i v i t i e s . 31 E. NOTES 1 In t h i s c h a p t e r n a t i o n a l d a t a i s used and the d e f i n i t i o n s of farms are t h o s e t h a t are used i n the n a t i o n a l s t a t i s t i c s . ( i n c h a p t e r I I I , we w i l l form our own d e f i n i t i o n s ) . Large farms a r e farms over 2 h e c t a r e s , s m a l l farms a r e tho s e w i t h l e s s than 1 h e c t a r e of c u l t i v a t a b l e l a n d (not c o r r e c t e d f o r l a n d q u a l i t y ) . F u l l - t i m e farms a r e farm households where a l l the income i s g enerated on the farm. A g r i c u l t u r a l p a r t - t i m e farms are farms where the farming a c t i v i t y p r o v i d e s more than h a l f the f a m i l y income. The r e s t of the farms a r e n o n - a g r i c u l t u r a l p a r t - t i m e f a r m e r s . The d e f i n i t i o n of p a r t - t i m e f a r m i n g i s based on income s h a r e s . ( T h i s study w i l l use a f e r t i l i t y c o r r e c t e d measure of s i z e and a la b o u r s u pply d e f i n i t i o n f o r p a r t - t i m e farming.) 2 A comprehensive s t u d y of the development of Taiwan u n t i l 1972, which was used e x t e n s i v e l y can be found i n HO S. (1978). 3 For r e f e r e n c e s see the b i b l i o g r a p h y s e c t i o n on l a n d . 4 V a r i o u s i s s u e s of PDAF, A g r i c u l t u r a l y e a r b o o k s ; see s e c t i o n C.1 on the l a n d market. 5 Chen, Wang (1980) . 6 Annual Report on Farm Record Keeping F a m i l i e s . 7 PDAF, A g r i c u l t u r a l yearbooks and t a b l e B.1 i n appendix B. 8 Chen, Wang (1980). 9 Shen T.H. (1974). 10 The r e s t of t h i s p a ragraph and t h e next a re based on statements from v a r i o u s annual r e p o r t s of the JCRR ( J o i n t Commission f o r R u r a l R e c o n s t r u c t i o n , the major a g r i c u l t u r a l a u t h o r i t y d u r i n g the 1950-1978 p e r i o d ) , P D A F - a g r i c u l t u r a l yearbooks; Peng (1980) f o r m e c h a n i z a t i o n q u e s t i o n s ; Shen (1974) and JCRR (1978) f o r p o l i c y q u e s t i o n s . 11 R i c e Review Magazine (1980). 12 Peng (1980) f o r the whole s e c t i o n on m e c h a n i z a t i o n . 32 13 Custom c o n t r a c t : r e n t a l c o n t r a c t f o r an a g r i c u l t u r a l s e r v i c e u s u a l l y h i r e d on the b a s i s of a r e a s e r v i c e d (machine + o p e r a t o r s ) or per day ( a n i m a l + o p e r a t o r ; s k i l l e d l a b o u r s e r v i c e ) . 14 T able B.4 i n appendix B. 15 JCRR, annual r e p o r t s (1968-1976). 16 PDAF, a g r i c u l t u r a l yearbook, and t a b l e B.1 i n appendix B. 17 PDAF, a g r i c u l t u r a l yearbook, and t a b l e B.2. Note the d i f f e r e n c e i n the domestic r i c e p r i c e ( s u p p o r t e d as p a r t of the farm income p o l i c y ) and the e x p o r t p r i c e ( c o n c e s s i o n a r y as p a r t of the i n t e r n a t i o n a l a i d p o l i c y ) . 18 Chen, Wang (1980). 19 See a l s o Ho S. (1983) . 20 For r e f e r e n c e s see the b i b l i o g r a p h y s e c t i o n on l a n d 21 R e n t - R e d u c t i o n - A c t a r t . 2 , a r t . 4 . Dr. Mao s a i d t h a t these r e n t s a p p l y t o c o n t r a c t s r e g i s t e r e d i n 1949-53. S i n c e then no more tenancy c o n t r a c t s have been r e g i s t e r e d (see note 30) . 22 RRA, a r t . 6 . 23 RRA, a r t . 5 . 24 RRA, a r t . 1 9 , a r t . 2 0 . 25 Land Act 1930, 1936, a r t . 3 3 . 26 L a n d - t o - T i l l e r A c t , a r t . 1 0 . 27 LTT, a r t . 1 2 . 28 LTT, a r t . 3 0 . 29 Mao ( 1978), p i 35-6. 30 p e r s o n a l t a l k s w i t h Dr. Mao ( C h i e f of the Land Reform I n s t i t u t e and C h i e f of the Economic P l a n n i n g d i v i s i o n a t the C o u n c i l f o r A g r i c u l t u r a l P l a n n i n g (JCRR). 31 There i s a c o n s t r a i n t on the l e n g t h of time t h a t l a n d can l a y f a l l o w , a t most one season (3 months) i s a l l o w e d , o t h e r w i s e a p e n a l t y t a x i s imposed (and t h e r e i s r i s k of f o r c e d s e l l i n g ) . ( T a x a t i o n and T a r i f f Commission (1974); R e g i o n a l P l a n n i n g A c t 1974). 33 32 I t i s hard t o t e l l what the l e g a l s t a t u s i s of the c o n t r a c t f a r m i n g agreements but they are mentioned i n Mao ( 1978), p i 41 and Wu, Yu ( 1 980), p l 5 . 33 A l l s a l e s have t o be government approved and owner c u l t i v a t o r s can not morgage t h e i r p r e v i o u s l y owned l a n d beyond a l i m i t (Mao (1978), p136). The mortgage terms ar e the L a n d - t o - T i l l e r A c t terms u n t i l 1981 (10 y e a r s maximum) but have been r a i s e d s i n c e (15 y e a r s ) . 34 Yu, Wu (1980), p3; Chen ( 1 980), p2. Large farms e s p e c i a l l y are d i s a p p e a r i n g when the p a t r i a r c h of the f a m i l y d i e s and the f a r m i n g sons each c l a i m t h e i r s h are and become s e p a r a t e h o u s e h o l d s . On s m a l l e r farms, u s u a l l y o n l y one son c o n t i n u e s t o farm and the o t h e r non-farming b r o t h e r s do not s e l l t h e i r l a n d share but r e n t i t i n f o r m a l l y t o the f a r m i n g b r o t h e r . 35 Some p r o v i s i o n s of the R e g i o n a l P l a n n i n g Act (1978) a l s o d e a l w i t h the i s s u e of c o n v e r s i o n of farm l a n d i n t o non-farm l a n d and w i t h i s s u e of l a n d s p e c u l a t i o n . The a c t p r e v e n t s s a l e of a g r i c u l t u r a l l a n d s of c e r t a i n grades t o non-farmers ( i n h e r i t a n c e i s not c o v e r e d however). The a c t i s p r i m a r i l y d e s i g n e d t o c o n t r o l the c o n v e r s i o n of l a n d t o n o n - a g r i c u l t u r a l uses and has not y e t been e n f o r c e d . 36 See p r e v i o u s note. 37 An e x t e n s i v e survey of the e x t e n d of o f f - f a r m employment, the s o u r c e s of t h i s o f f - f a r m employment and the e f f e c t s on f a r m i n g can be found i n Ho S. (1983). 38 G a l l i n , G a l l i n (1982) r e p o r t t h a t the number of n u c l e a r f a m i l i e s had d e c l i n e d by n e a r l y h a l f w h i l e the number of j o i n t f a m i l i e s had r i s e n 3 - f o l d between 1958-9 and 1978-9 i n the v i l l a g e which they s t u d i e d . They s t a t e t h a t the . j o i n t f a m i l y i s the i d e a l (p208). They a l s o comment t h a t m o b i l i t y of men towards urban a r e a s has d e c l i n e d (p212). 39 T h i s s e c t i o n i s based on t h e o b s e r v a t i o n s of Peng (1980) f o r the custom work market of machines s e r v i c e s and on i n f e r e n c e from my p e r s o n a l i n v e s t i g a t i o n of farm p r o d u c t i o n a c t i v i t y and the h i r i n g p r a c t i c e s of 60 farmers i n South Taiwan f o r the year 1979. 40 W ith the i n c r e a s i n g awareness by the farmers of the h a r m f u l l e f f e c t s of some of the i n s e c t i c i d e s on humans, t h e r e w i l l p r o b a b l y be a g r e a t e r development of t h i s custom work market as p r o t e c t i v e equipment w i l l be c o n s i d e r e d necessary.- A d d i t i o n a l l y , new s e l f p o w e r e d s p r a y e r s have been i n t r o d u c e d . 34 41 Ho S. (1979). 42 DGBAS, Labour survey d a t a and t a b l e B.5. 43 See t a b l e B.6. where a more d e t a i l e d commentary i s g i v e n on the i m m i g r a t i o n f l o w s . 44 The one argument t h a t has been put f o r w a r d i n f a v o u r of s m a l l p a r t - t i m e f a r m i n g i s t h a t t h e i r e x i s t e n c e may have a f a v o u r a b l e impact on the r u r a l income d i s t r i b u t i o n . The o f f - f a r m income d i s t r i b u t i o n tends t o i n v e r s e l y m i r r o r the farm income d i s t r i b u t i o n so t h a t the t o t a l h o u s e h o l d income d i s t r i b u t i o n i s more e q u a l . See a l s o Koo (1982). 45 Yu, Wu (1980), p8, p l 5 , p26; Chen (1980), p23. 46 Yu, Wu (1980), p8. 47 Chen (1978), p98; Chen (1980), p5. 48 An e m p i r i c a l i n v e s t i g a t i o n of p a r t - t i m e f a r m i n g can be found i n Yu (1970). 35 CHAPTER III DATA AND HOUSEHOLD CHARACTERISTICS A. INTRODUCTION The empirical analysis in chapters four and five is based on data drawn from the 'Annual Report of Farm Record Keeping Families'. The purpose of this chapter is to describe t h i s data s e t 1 . The information as o r i g i n a l l y collected, and subsequently processed into machine readable form, is described in sections B-C. The data is organized by size, degree of off-farm . a c t i v i t y , a g r i c u l t u r a l region and time. The size of the farm is measured in paddy land equivalent hectares. The degree of importance of farming to the household is measured as the share of the family's labour supply that goes to the farming a c t i v i t y and i s c a l l e d ' p a r t i c i p a t i o n ' . To make the study managable, only four of the eight agronomic regions of the Farm Record Keeping Families survey w i l l be used (the North, Mid- and South Rice regions and the Sugar regions).. There are nine annual samples (1972-1980). The various c h a r a c t e r i s t i c s of the farmers are discussed in section D. 36 B. THE ANNUAL REPORT OF FARM RECORD KEEPING FAMILIES Taiwan has had a l o n g h i s t o r y of farm r e c o r d k e e p i n g . I t began i n 1953 when a s m a l l number of farm h o u s e h o l d s kept farm r e c o r d s as a p a r t of an e d u c a t i o n a l programme conducted by ten a g r i c u l t u r a l s c h o o l s 2 . In 1960 the r e s p o n s i b i l i t y of the r e c o r d k e e p i n g p r o j e c t was t r a n s f e r r e d from the s c h o o l s t o i n t e r e s t e d Farmers A s s o c i a t i o n s . S i n c e not a l l Farmers A s s o c i a t i o n s p a r t i c i p a t e d i n the p r o j e c t farm households from some im p o r t a n t a g r i c u l t u r a l d i s t r i c t s were not r e p r e s e n t e d . In 1964 the Taiwan P r o v i n c i a l Department of A g r i c u l t u r e and F o r e s t r y j o i n e d the p r o j e c t and e n l a r g e d the sample of farm r e c o r d keeping f a m i l i e s t o i n c l u d e households from e i g h t a g r i c u l t u r a l d i s t r i c t s . S i n c e 1972, the p r o j e c t has been under the d i r e c t s u p e r v i s i o n of the township o f f i c e s . The d a t a used i n t h i s s t u d y i s drawn from the r e c o r d s kept between 1972 and 1980. D u r i n g t h i s p e r i o d , about 450 farm households from 60 s e l e c t e d t o w n s h i p s from a l l 8 major a g r i c u l t u r a l r e g i o n s p a r t i c i p a t e d a n n u a l l y i n the farm r e c o r d keeping p r o j e c t . Because farm households p a r t i c i p a t e d on a v o l u n t a r y b a s i s , t h e r e i s no reason t o s u s p e c t the v a l i d i t y of the i n f o r m a t i o n r e c o r d e d 3 . S i n c e a l l t r a n s a c t i o n s ( c a s h and i n - k i n d ) were r e c o r d e d d a i l y , the a c c u r a c y i s a l s o h i g h , c e r t a i n l y h i g h e r than the a c c u r a c y of d a t a from p e r i o d i c s u r v e y s where the responses depend on 37 memory. However, because the p a r t i c i p a t i n g farmers are self - s e l e c t e d , the sample is l i k e l y to be biased. It i s l i k e l y that there are too many large farms and too few part-time farmers in the sample. Some of the bias can be corrected, but not a l l , as w i l l be discussed in section D.5. Despite t h i s problem, the journals kept by the farm record keeping families are the most complete and r e l i a b l e farm household records available in Taiwan. Indeed, outside of Taiwan, few countries can boast of data of thi s high q u a l i t y . C. DATA FROM THE FARM RECORD KEEPING FAMILIES Farm record keeping families recorded detailed stock and flow information on nearly a l l aspects of their a c t i v i t i e s . Unfortunately, some of the information recorded was lost through aggregation when the data was processed into machine readable form. Both the information that was recorded by the households and what i s available in machine readable form is described in what follows". Stock data At the beginning and end of each calendar year, each Farm Record Keeping Family reported a detailed accounting of a l l their real and f i n a n c i a l assets and l i a b i l i t i e s . This account includes information on land holdings, buildings, machines, tools, f r u i t trees, draft animals, livestock, crops growing on the f i e l d , stored produce, stored farm 38 supplies, f i n a n c i a l assets, l i a b i l i t i e s (short and long) and cash. The recorded information was aggregated into 15 categories when i t was processed and converted into machine readable form. (A l i s t of categories is provided in appendix C.) Unfortunately, the processed data does not distinguish between assets for farm production use and for consumption use. Consequently, farm b u i l d i n g s 5 could not be included in farm assets 6 and no attempt was made to estimate the labour input from draft animals 7 used in farming. Flow data Each Farm Record Keeping Family kept d a i l y records of each cash 8 and 'in-kind 9' transaction for the family, for the farm and for the off-farm a c t i v i t i e s . The information was then processed into 17 consumption expenses, 17 farm expenses, 16 farm receipt (organized by crops), 2 off-farm cost and 4 off-farm receipt categories, most with a cash and 'in-kind' subdivision. (See appendix C for a l i s t of these categories.) Unfortunately, the processed data cannot be used to allocate costs to each farm output, and off-farm labour a c t i v i t i e s have been retained with very l i t t l e d e t a i l . Farm Record Keeping Families kept extremely detailed information on the labour a l l o c a t i o n in the i r farming a c t i v i t y . The amount of labour used on each crop was recorded d a i l y for each member of the family, for the hired workers, for the machines and for the animals (the l a t t e r 39 two separately for self-owned and hired), with a description of the a c t i v i t y (hoeing, land preparation, weeding, f e r t i l i z i n g e t c . . . ) . But most d e t a i l s were lost when the information was processed and converted to machine readable form. A l l information was converted into 3 labour categories: annual male family labour, female family l a b o u r 1 0 and hired l a b o u r 1 1 . It i s p a r t i c u l a r l y unfortunate that the information on the use of the self-owned machines and animals was l o s t 1 2 (the hired amounts can be retrieved from the relevant cost category). Also, labour cannot be allocated to the different farm receipt categories. But the quality of t h i s labour data i s s t i l l exceptional because there i s no need to estimate the labour flow from the family members. Each Farm Record Keeping Family also kept information on the amount and quality of land used in i t s farm operation, and the amount of land allocated to each crop. Subsequently, when the data was processed, the land information was aggregated into 3 categories of q u a l i t y 1 3 (paddy, dry and other, without regard for the quality grade) and 4 categories of crop a r e a 1 4 ( f i r s t r i c e , second r i c e , other crops and permanent crops). Family c h a r a c t e r i s t i c s Much information on the c h a r a c t e r i s t i c s of each family was co l l e c t e d . Each Farm Record Keeping Family reported the age, education, occupation and health of,each 40 family member. But most of this information was lost when the data was processed. Family members were c l a s s i f i e d as adult male, female, old and young. The lack of information on the family members' c h a r a c t e r i s t i c s , together with the fact that off-farm income flows were not retained in much d e t a i l , makes i t impossible to conduct an in-depth analysis of the off-farm a c t i v i t y . But a farm a c t i v i t y study which does not concentrate on managerial s k i l l e f f e c t s is s t i l l possible with a l l the other data available in thi s survey. In summary, the data used in thi s study i s based on the da i l y records kept by Taiwanese farm families. A wealth of information was gathered but much d e t a i l was lost when the data was aggregated and converted into machine readable form. . Thus, neither production costs nor labour input can be allocated to the output categories. Secondly, the amount of labour input from self-owned draft animals and machines is not avai l a b l e . Thirdly, a g r i c u l t u r a l buildings could not be included in farm assets. Fourthly, the information on off-farm a c t i v i t y which was retained, was i n s u f f i c i e n t to do an in-depth analysis of the off-farm a c t i v i t y . But since, t h i s study i s focussed on the consequences of the size and the degree of off-farm a c t i v i t y on farming, the data that i s available i s more than s u f f i c i e n t and indeed of very high qu a l i t y . 41 D. DATA BASE AND CHARACTERISTICS OF THE FARMS The main aim of t h i s s tudy i s t o t e s t the h y p o t h e s i s t h a t l a r g e f u l l - t i m e farms a r e more e f f i c i e n t t h a t the o t h e r farm t y p e s , and t h i s s e c t i o n d e s c r i b e s the d e f i n i t i o n of each farmer c h a r a c t e r i s t i c . To make t h e . s t u d y managable the d e c i s i o n was made t o r e s t r i c t the a n a l y s i s to f o u r of Taiwan's e i g h t a g r i c u l t u r a l r e g i o n s , so t h a t the a n n u a l data base i s l i m i t e d t o o n l y 250 of the 450 Farm Record Keeping F a m i l i e s and the whole sample c o n t a i n s 2274 o b s e r v a t i o n s . To compare the farm performance of the h o u s e h o l d s , the households were c l a s s i f i e d a c c o r d i n g t o f o u r c h a r a c t e r i s t i c s : , farm s i z e , p a r t i c i p a t i o n , r e g i o n and year of p r o d u c t i o n . The arguments which are used t o defend the p r e f e r e n c e f o r the l a r g e f u l l - t i m e farm type a r e the base f o r the d e f i n i t i o n s of t h e s e c h a r a c t e r i s t i c s chosen i n t h i s s t u d y . D.1 S i z e of the farm (s) In the l i t e r a t u r e on the e f f i c i e n c y of d i f f e r e n t s i z e s of farms, farm s i z e i s measured i n a v a r i e t y of ways. The most f r e q u e n t l y used measure i s the amount of c u l t i v a t a b l e l a n d h e l d by the farm h o u s e h o l d 1 5 . T h i s measure a p p r o x i m a t e s the s c a l e of farm o p e r a t i o n i f l a n d i s of u n i f o r m q u a l i t y and i f a l l farms are engaged i n the same type of f a r m i n g a c t i v i t i e s . 4 2 I f the l a n d i s not of u n i f o r m q u a l i t y then a comparison of farm performance by s i z e , measured by the amount of c u l t i v a t e d l a n d , may be q u i t e m i s l e a d i n g . I f a l l l a r g e farms have poor l a n d , w h i l e s m a l l farms have f e r t i l e l a n d , then e f f i c i e n c y comparisons do not r e f l e c t the e f f e c t of s i z e o n l y , but a l s o t h a t of l a n d q u a l i t y . To c o r r e c t f o r the l a n d q u a l i t y i n t h i s s t u d y , an e q u i v a l e n t - p a d d y - l a n d s i z e measure i s computed. A l s o , i f the type of f a r m i n g a c t i v i t y i s ve r y d i f f e r e n t between farmers then l a n d s i z e i s a m i s l e a d i n g i n d i c a t o r of the s c a l e of o p e r a t i o n . The o p e r a t i o n s c a l e of a s p e c i a l i z e d l i v e s t o c k (or f i s h pond) pr o d u c e r i s not r e f l e c t e d by the l a n d s i z e . F o r t u n a t e l y , the farmers i n the sample a r e c r o p farmers who have some l i v e s t o c k or add some f i s h e r y ( f o r e s t r y or p r o c e s s i n g ) as a minor a c t i v i t y . To t a k e account of the d i f f e r e n c e s i n l a n d q u a l i t y 1 6 , t h i s study measures farm s i z e i n terms of paddy l a n d e q u i v a l e n t h e c t a r e s . The d r y l a n d 1 7 was c o n v e r t e d i n t o paddy l a n d e q u i v a l e n t h e c t a r e s by m u l t i p l y i n g i t s a r e a by .87 ( the average of the c o n v e r s i o n r a t e s between•equal graded paddy and dry l a n d ) , and ' o t h e r ' l a n d 1 8 was c o n v e r t e d by u s i n g .187 (the c o n v e r s i o n r a t e of the l o w e s t q u a l i t y of dry l a n d a g a i n s t grade 10 paddy l a n d ) . The c o n v e r s i o n r a t e s were c a l c u l a t e d from the l a n d t a x assessment s c h e d u l e s used i n Taiwan t o t a x l a n d of d i f f e r e n t grade and t y p e 1 9 . 43 In summary, the land size (s) is calculated as: s = 1 x P + .87 x D + . 1 8 9 x 0 where P = Paddy land hectare D = Dry land hectare 0 = Other land hectare Our sample farms are c l a s s i f i e d according to the amount of equivalent land they use in their operation. There are three categories: small (S) s < 1 ha medium (M) 1 ha < s ^ 2 ha large (L) 2 ha < s where s i s the equivalent c u l t i v a t a b l e land in h e c t a r e s 2 0 . D.2 P a r t i c i p a t i o n (p): the degree of importance of farming to the farm household The degree to which the farming a c t i v i t y i s part of the family a c t i v i t i e s ( c a l l e d participation) can be measured in several ways. But the d e f i n i t i o n should relate to.the mechanism by which part-time farming is assumed to influence farm production e f f i c i e n c y (similar to 'size' being related to the economies of scale assumption). In the published discussions on the e f f e c t of part-time farming in Taiwan 2 1, there i s no agreement on the main reason why e f f i c i e n c y losses are incurred. But the arguments are usually variations around three main themes: (l) inattentive farming because farm income i s not important for family income, (2) the labour quantity for farming i s residual when the main labour supply i s for off-farm work, and (3) the labour 44 q u a l i t y f o r f a r m i n g i s r e s i d u a l when the b e s t l a b o u r s u p p l y i s f o r o f f - f a r m work. We d e f i n e ' p a r t i c i p a t i o n ' as the share of the f a m i l y l a b o u r s u p p l y g o i n g t o the farm a c t i v i t y i n the t o t a l l a b o u r s u p p l y of the f a m i l y . With t h i s d e f i n i t i o n we t r y t o c a p t u r e t h e e f f e c t f o r the farm a c t i v i t y of the r e s i d u a l i t y of the f a m i l y farm l a b o u r . A second and l e s s i m p o r t a n t reason f o r t h i s l a b o u r d e f i n i t i o n of p a r t i c i p a t i o n i s t h a t the a l t e r n a t i v e farm income share d e f i n i t i o n i s too s e n s i t i v e t o the v a r i a b i l i t y of the farm income as i t i s i n f l u e n c e d by n a t u r a l c o n d i t i o n s . A l t h o u g h the farm income d e f i n i t i o n seems t o be c l o s e r t o the ' a t t e n t i o n share' reason a g a i n s t p a r t - t i m e f a r m i n g , i n p r a c t i c a l c a l c u l a t i o n s i t w i l l not c a p t u r e t h e more s t a b l e c h a r a c t e r i s t i c of p a r t - t i m e f a r m i n g 2 2 . The l a b o u r supply amounts which go t o the o f f - f a r m and the farm a c t i v i t y are more s t a b l e from year t o year and c l o s e r t o the i n h e r e n t f a m i l y c h a r a c t e r i s t i c . So our l a b o u r s u p p l y d e f i n i t i o n of p a r t i c i p a t i o n c a p t u r e s both the l a b o u r r e s i d u a l i t y arguments and the ' a t t e n t i o n share f o r f a r m i n g ' argument. Farm Record Keeping F a m i l i e s kept d e t a i l e d r e c o r d s of the amount of l a b o u r spent on farm work but d i d not r e p o r t the o f f - f a r m l a b o u r t i m e . However, the farmers d i d r e p o r t the incomes from (1) temporary or o c c a s i o n a l l a b o u r and from (2) f u l l - t i m e l a b o u r or o t h e r b u s i n e s s a c t i v i t y . To e s t i m a t e the amount of o f f - f a r m l a b o u r we assume t h a t the 45 f i r s t type of o f f - f a r m l a b o u r commands a wage which i s comparable t o the a g r i c u l t u r a l d a i l y wage and t h a t the second o f f - f a r m work c a t e g o r y i s s u p p l i e d a t wages which a re comparable t o the m a n u f a c t u r i n g w a g e 2 3 . The o f f - f a r m l a b o u r s u p p l y i s the sum of the temporary l a b o u r ( c a l c u l a t e d from the temporary income by d i v i d i n g t h i s income by the a g r i c u l t u r a l d a i l y wage) and the f u l l time l a b o u r ( c a l c u l a t e d from the f u l l - t i m e income by d i v i d i n g by the m a n u f a c t u r i n g d a i l y wage). T o t a l f a m i l y l a b o u r s u p p l y i s the sum of the f a m i l y l a b o u r used on the farm (measured i n male e q u i v a l e n t 2 4 ) and the e s t i m a t e d f a m i l y l a b o u r used i n o f f - f a r m work. Farm households a re c l a s s i f i e d a c c o r d i n g t o the degree of on-farm p a r t i c i p a t i o n i n t o f o u r c a t e g o r i e s : low p a r t i c i p a t i o n (LP) .25 > p p a r t - t i m e 1 (PT1) .50 > p > .25 p a r t - t i m e 2 (PT2) .75 > p > .50 f u l l - t i m e (FT) p > .75 where p i s the share of f a m i l y l a b o u r a l l o c a t e d t o farm work (p = f a m i l y farm l a b o u r / t o t a l f a m i l y l a b o u r ) . D.3 A g r i c u l t u r a l r e g i o n s ( r ) The 250 farms i n our annua l samples a r e from f o u r major a g r i c u l t u r a l r e g i o n s of Taiwan: N o r t h R i c e , Mid R i c e , South R i c e and Sugar. These r e g i o n s d i f f e r i n t h e i r c l i m a t e , i n t h e i r agronomic environment and i n t h e i r o p p o r t u n i t i e s f o r n o n - a g r i c u l t u r a l a c t i v i t y . 46 The North Rice region (NR) is in the north of Taiwan where r i c e can be grown in the valleys, in the Taipei pla i n and in the North Eastern p l a i n . Citrus f r u i t s can be grown on the slope land. The region i s cool in the winter and receives most of i t s rain in the f a l l . This i s the most i n d u s t r i a l i z e d and urbanized region in Taiwan. Both Taipei, the c a p i t a l , and Keelung, the northern port c i t y , are in th i s region. The opportunity for off-farm employment in i n d u s t r i a l and commercial a c t i v i t i e s appears to be good throughout the rural area of t h i s region. Below the North Rice region is the Mid-Rice region (MR). It i s less mountainous and more r u r a l . However i n d u s t r i a l a c t i v i t y i s rapidly spreading into this region from the North. The climate i s subtropical and substantially warmer than that of the North-Rice region. The South Rice (SR) region is the major a g r i c u l t u r a l area in Taiwan. It i s located near the southern t i p of the island. The land is f l a t , f e r t i l e and i r r i g a t e d . Some of the land in this region was consolidated in 1 978 2 5 . The region has one major i n d u s t r i a l centre, the port c i t y of Kaohsiung, but most of the region i s s t i l l primarily r u r a l . This region has some of the best land in Taiwan for growing r i c e and beans. Since the climate is t r o p i c a l , the area i s also suitable for t r o p i c a l crops and crops mature rapidly. It should be noted that some of the farms in our sample are located in the h i l l s bordering this region and consequently have a higher share of dry land area. 47 The Sugar r e g i o n (SUG) l i e s on the so u t h - w e s t e r n s i d e of the mountain range t h a t runs from the n o r t h t o the south of Taiwan. The l a n d i s h i l l y and l e s s i r r i g a t e d , and the c l i m a t e i s t r o p i c a l . T h i s r e g i o n i s l a r g e l y r u r a l w i t h o u t much o p p o r t u n i t y f o r employment o u t s i d e the a g r i c u l t u r a l s e c t o r . I t s h o u l d be noted t h a t the c l a s s i f i c a t i o n of farm households by r e g i o n which i s used i n t h i s s t u d y , i s s l i g h t l y d i f f e r e n t from the c l a s s i f i c a t i o n i n the p u b l i s h e d r e p o r t on farm r e c o r d k e e p i n g f a m i l i e s . A f t e r an i n v e s t i g a t i o n of the c r o p p a t t e r n s , some v i l l a g e s i n b o r d e r i n g a r e a s were moved i n t o a n o ther c r o p r e g i o n f o r our study so as t o ensure t h a t farms i n each r e g i o n have a s i m i l a r o u tput mix. T h i s was done so t h a t our d a t a would b e t t e r comply w i t h the assumption of a common p r o d u c t i o n t e c h n o l o g y w i t h i n a r e g i o n . T h i s r e c l a s s i f i c a t i o n of v i l l a g e s d i d not change the c h a r a c t e r i s t i c economic c o n d i t i o n s of the sample r e g i o n s as the r e c l a s s i f i e d v i l l a g e s were g e o g r a p h i c a l l y c l o s e t o each o t h e r . D.4 Time To t e s t the h y p o t h e s i s t h a t s m a l l farms a r e l e s s r e s p o n s i v e t o changing c o n d i t i o n s ( e . g . s h i f t i n demand p a t t e r n and changes i n the l a b o u r market) than l a r g e farms, response p a t t e r n s and time t r e n d s a r e needed. In t h i s 48 s t u d y , the h y p o t h e s i s w i l l be t e s t e d w i t h n i n e annual samples (1972-1980) of 250 Farm Record Keeping F a m i l i e s . D.5 The d i s t r i b u t i o n of farm households The 2274 farms of our sample have been c l a s s i f i e d i n t o t h r e e farm s i z e c a t e g o r i e s ( s m a l l , medium, l a r g e ) , f o u r p a r t i c i p a t i o n c a t e g o r i e s (LP, PT1, PT2, F T ) , f o u r r e g i o n a l c a t e g o r i e s (NR, MR, SR, SUG) and n i n e time p e r i o d s (1972-1980). We can now d i s c u s s the i s s u e of s e l e c t i o n b i a s . T a b l e 3.1 p r e s e n t s the d i s t r i b u t i o n of our sample farms and t h a t of a l l Taiwanese farms by s i z e and by p a r t i c i p a t i o n . However, comparisons of the two d i s t r i b u t i o n s must be done w i t h c a r e because the n a t i o n a l data measures s i z e by h e c t a r e s ( i n s t e a d of paddy l a n d e q u i v a l e n t h e c t a r e s ) and p a r t i c i p a t i o n by income share ( i n s t e a d of l a b o u r s h a r e ) . A comparison of the two d i s t r i b u t i o n s i n T able 3.1 s u g g ests t h a t our sample c o n t a i n s t o o few s m a l l farms and somewhat too few p a r t - t i m e farms. T o t a l sample averages a r e t h e r e f o r e d i s t o r t e d , but i n t h i s study we a r e not p a r t i c u l a r l y i n t e r e s t e d i n t o t a l sample a v e r a g e s . Rather our i n t e r e s t . i s i n the d i f f e r e n c e s between the v a r i o u s c a t e g o r i e s of farms, thus what i s of importance i s t h a t c e l l a v erages a r e u n b i a s e d . They w i l l be u n b i a s e d i f the farmers i n each c e l l a r e t r u l y r e p r e s e n t a t i v e f o r t h a t c e l l . T h i s l a s t r e q u i r e m e n t we assume f u l l f i l l e d i n t h i s study because 49 T a b l e 3.1 FARM TYPE DISTRIBUTION (PERCENTAGES) SAMPLE(a) NATIONAL(b) PT FT TOT PT FT TOT S 18 33 51 S 32 40 72 M 21 1 3 34 M 1 6 4 20 L 1 2 3 1 5 L 7 1 8 " TOT ; 51 49 100 TOT 55 45 100 Source a: average share of each farm c a t e g o r y , c a l c u l a t e d from the t o t a l number of sample ho u s e h o l d s (2274) b: average share of each farm c a t e g o r y , c a l c u l a t e d by adding the numbers of 1975 and 1980 farm households t o g e t h e r (1975,.1980 a g r i c u l t u r a l census) n o t e : FT: sample: household w i t h over 50% farm share i n f a m i l y l a b o u r s u p p l y census: Household w i t h over 50% farm share i n f a m i l y income L : sample: household w i t h more than 2 h e c t a r e paddy e q u i v a l e n t l a n d c e nsus: household w i t h more than 2 h e c t a r e l a n d M :• sample: w i t h between 1 and 2 h e c t a r e paddy e q u i v a l e n t l a n d c e nsus: w i t h between 1 and 2 h e c t a r e l a n d t h e r e a r e a s u f f i c i e n t number of c l a s s i f i c a t i o n c r i t e r i a ^ c h a r a c t e r i s t i c s ) and c a t e g o r i e s w i t h i n each c r i t e r i a t o i n s u r e t h a t the households i n each c e l l a re homogeneous. The d i s t r i b u t i o n s of the sample farms by the f o u r c h a r a c t e r i s t i c s ( s i z e , p a r t i c i p a t i o n , r e g i o n , time) are p r e s e n t e d i n appendix C, t a b l e C . 1 2 6 . In summary, the i n f o r m a t i o n of the Farm Record Keeping F a m i l i e s i s of e x c e p t i o n a l q u a l i t y f o r i n v e s t i g a t i n g the consequences f o r f a r m i n g of the s i z e and t h e degree of f a m i l y l a b o u r e f f o r t towards t h e i r f a r m i n g . Because of the 5 0 d a i l y recording of the a c t i v i t i e s by the households, the farm production data for each household is very accurate, and even after processing, s u f f i c i e n t l y extensive for the purpose of th i s study. Indeed, few data samples on agriculture exist of this q u a l i t y and extend. 51 E. NOTES 1 T h i s c h a p t e r i s p a r t i a l l y based on my p e r s o n a l e x p e r i e n c e w i t h the D a i l y Farm Record Keeping Survey and w i t h the v a r i o u s o r g a n i z a t i o n s t h a t handle the S u r v e y . I v i s i t e d Taiwan from October 1979 t o September 1980, where I had the o p p o r t u n i t y of w o r k i n g a t the C o u n c i l of A g r i c u l t u r a l P l a n n i n g and Development ( T a i p e i ) . Numerous v i s i t s were made t o the P r o v i n c i a l Department of A g r i c u l t u r e and F o r e s t r y ( T a i c h u n g ) , e s p e c i a l l y t o the department which p r o c e s s e s the Farm Record Keeping F a m i l i e s survey (but a l s o the departments r e s p o n s i b l e f o r e x t e n s i o n , i n t e r n a t i o n a l c o o p e r a t i o n and t e c h n i c a l r e s e a c h ) . I i n v e s t i g a t e d the o r i g i n a l r e c o r d s (the d a i l y s h e e t s ) of 60 Farm Record Keeping F a m i l i e s of the South R i c e r e g i o n i n o r d e r t o u n d e r s t a n d the f a r m i n g methods, the household b e h a v i o u r , and the r e l a t i o n s h i p o f • t h e o r i g i n a l r e c o r d s , to the p r o c e s s e d d a t a . I was a b l e t o v i s i t the South R i c e r e g i o n ( P i n g t u n g ) d u r i n g December 1979 when the w i n t e r c r o p s were on the f i e l d . I v i s i t e d the M i d - R i c e r e g i o n (Chinzu) d u r i n g the f i r s t - r i c e h a r v e s t season and a l s o d u r i n g the s e c o n d - r i c e p l a n t i n g season of 1980. As a r e s u l t I had the o p p o r t u n i t y t o t a l k t o the d i f f e r e n t t y p e s of farmers ( c r o p , p i g , f i s h ) i n the d i f f e r e n t s easons. I a l s o v i s i t e d a Farmers A s s o c i a t i o n and an A g r i c u l t u r a l r e s e a r c h s t a t i o n , and c o u l d ask q u e s t i o n s about the b e h a v i o u r of the f a r m e r s , and t h e o r g a n i z a t i o n s ' r o l e s . 2 Farm Record Keeping was s t a r t e d i n 1953 and the l i t e r a c y r e q u i r e m e n t was d i s t o r t i v e a t t h a t t i m e . Farms whose farm income share was l e s s t h a t 50% were a l s o e x c l u d e d i n these e a r l y s u r v e y s . The r e p r e s e n t a t i v e n e s s problem was thus more severe than i n the s u r v e y s s i n c e 1972. 3 Farmers do not f e a r t h a t the i n f o r m a t i o n w i l l be used f o r income t a x purposes because t h e r e i s o n l y a l a n d t a x on the f a r m i n g h o u s e h o l d s . There may be some b i a s towards h i g h e r p r o f i t i n the sample, because the a c t of r e p o r t i n g may i n c r e a s e the f a r m e r ' s awareness of h i s a c t i o n s . Farm h o u s e h o l d s do not have t o keep account of t h e i r farm b u s i n e s s , n e i t h e r f o r t a x nor o t h e r r e a s o n s , but the c a t e g o r i z e d s t a t e m e n t s of each h o u s e h o l d produced by the PDAF can be used as a c c o u n t i n g s t a t e m e n t s . Some farmers have i n d e e d asked f o r t h e s e s t a t e m e n t s . They were used to ask f a r m i n g a d v i c e from the e x t e n s i o n o f f i c e r s i n the Farmer's A s s o c i a t i o n and t o get l o a n s from the FA c r e d i t department. However most farmers j u s t w r i t e down the i n f o r m a t i o n and never l o o k a t i t a g a i n . 52 4 P r o c e s s i n g f o r s t o r a g e was done at the P r o v i n c i a l Department f o r A g r i c u l t u r e and F o r e s t r y (PDAF). A l l r e c o r d e d i n f o r m a t i o n was reduced t o one sheet of d a t a per f a r m e r . The d a t a from t h e s e s h e e t s was put on computer tape a t the C o u n c i l f o r A g r i c u l t u r a l P l a n n i n g and Development (CAPD), and t h e s e d a t a tapes w i l l be used i n t h i s s t u d y . 5 F o r t u n a t e l y , the house has by f a r the l a r g e s t share i n the b u i l d i n g w e a l t h . Equipment barns a r e u s u a l l y o n l y shacks of low v a l u e . Only i f t h e r e i s a s u b s t a n t i a l amount of l i v e s t o c k p r o d u c t i o n ( p i g s ) i s t h e r e investment i n b a r n s . But t h i s type of s m a l l s c a l e p i g p r o d u c t i o n on c r o p farms has been d y i n g out s i n c e the l a t e s i x t i e s because i t i s a l a b o u r i n t e n s i v e a c t i v i t y . 6 Income from f i n a n c i a l w e a l t h was c l a s s i f i e d by the PDAF as o f f - f a r m income. T h i s i n d i c a t e s t h a t f i n a n c i a l w e a l t h i s not c o n s i d e r e d a farm a s s e t by the PDAF, and we f o l l o w t h i s p r a c t i c e t o o . 7 D r a f t a n i m a l s a r e used as a l a b o u r i n p u t f o r l a n d p r e p a r a t i o n , but they a r e r a p i d l y b e i n g r e p l a c e d by t i l l e r s . 8 The farmers were a l s o asked t o w r i t e down the u n i t p r i c e and the q u a n t i t y of each t r a n s a c t i o n . 9 The farmers were asked t o w r i t e down the imputed v a l u e of the t r a n s a c t i o n , i f they had n o t , then the PDAF used the market p r i c e . 10 A l l female l a b o u r i n t h i s study i s measured i n male e q u i v a l e n t u n i t s . The c o n v e r s i o n r a t e i s .8, so ten hours worked by a women were counted as e i g h t hours of i n p u t . 11 For h i r e d l a b o u r no d i s t i n c t i o n was made f o r male or fe m a l e , but the female l a b o u r was c o u n t e d i n male e q u i v a l e n t s . The human l a b o u r c o n t e n t of custom work i s counted i n the h i r e d l a b o u r c a t e g o r y . S i m i l a r l y , the human l a b o u r c o s t ( e v a l u a t e d a t the market wage) was s u b t r a c t e d from the custom work c o s t and the r e s i d u a l c l a s s i f i e d i n the machine c o s t ( b e f o r e 1977 i n the r e n t a l c o s t ) . 12 The Farm Record Keeping F a m i l i e s r e p o r t e d the hours t h a t a d r a f t a n i m a l or a machine which they owned had been used by a f a m i l y member. In f a c t the Annual Report of Farm Record Keeping F a m i l i e s r e p o r t s the number of days per month t h a t the s e l f - o w n e d and h i r e d a n i m a l or machines were used. But t h i s d a t a was not r e t a i n e d f o r each farmer on the machine r e a d a b l e r e c o r d s . 53 13 The i n v e n t o r y of l a n d and the l a n d use data t o g e t h e r made i t p o s s i b l e t o c a l c u l a t e the c u l t i v a t a b l e l a n d t h a t the farmer had a t h i s d i s p o s a l . The c u l t i v a t a b l e l a n d i n c l u d e s the r e n t e d l a n d but e x c l u d e d the l a n d r e n t e d o u t . 14 The amount of cropped l a n d when the l a n d was used t o grow v e g e t a b l e s i s the h a r d e s t t o c a l c u l a t e c o r r e c t l y . Farmers s u b d i v i d e the l a n d i n s t r i p s and s e v e r a l t y p e s of v e g e t a b l e s a r e grown s i d e by s i d e . They a l s o u s u a l l y are p l a n t e d a t d i f f e r e n t time i n t e r v a l s . Only i f the whole f i e l d i s plowed ( u s u a l l y i f the farmer r e p o r t e d a l a n d p r e p a r a t i o n a c t i v i t y w i t h a n i m a l or machine use) can one determine t h a t the v e g e t a b l e c r o p was e n t i r e l y h a r v e s t e d . Thus f o r v e g e t a b l e f a r m e r s , sometimes the amount of cropped l a n d i s u n d e r e s t i m a t e d because h a r v e s t i n g and r e p l a n t i n g of v e g e t a b l e s i s c o n t i n u o u s ( t h i s can produce v e r y h i g h v e g e t a b l e y i e l d s ) 15 Sen 1962. 16 The d i f f e r e n t l a n d t y p e s (paddy, d r y , o t h e r ) are u s u a l l y t r e a t e d s e p a r a t e l y i n the a g r i c u l t u r a l p o l i c i e s . 17 Dry l a n d i s r a i n f e d l a n d as compared t o paddy l a n d which i s i r r i g a t e d . 18 'Other' l a n d i s r i v e r b e d l a n d , f o r e s t l a n d and f i s h ponds. 19 PDAF, tax assesment r e c o r d s 20 Two more l a n d s i z e d e f i n i t i o n s c o u l d be used. Rao (1967) e x c l u d e s f a l l o w l a n d w h i l e Rudra (1968) c o u n t s l a n d t w i c e i f i t i s cropped t w i c e . Both a u t h o r s argue t h a t t h e i r l a n d measure i s c l o s e r t o a measure of s c a l e of o p e r a t i o n , the l a t t e r b e i n g a measure t h a t i n c l u d e s a l l the f a c t o r s of p r o d u c t i o n . But we c o n s i d e r the c h o i c e of f a l l o w l a n d and the l e v e l s of n o n - l a n d i n p u t s as p a r t of the p r o d u c t i o n d e c i s i o n . The d i f f e r e n t l y s i z e d farms s h o u l d choose i n an e q u a l l y e f f i c i e n t way. 21 See c h a p t e r I I , s e c t i o n D. 22 Farm income can v a r y d r a m a t i c a l l y from year t o year depending on the weather, d i s e a s e and pest c o n d i t i o n s . As a r e s u l t , farm income s h a r e s w i l l change randomly and do not r e p r e s e n t an i n h e r e n t f a m i l y c h a r a c t e r i s t i c . 54 23 The m a n u f a c t u r i n g wage was c a l c u l a t e d from the monthly income i n t h e m a n u f a c t u r i n g s e c t o r and d i v i d e d by the average monthly number of work days i n t h i s s e c t o r . T h i s i s s i m i l a r t o the t r e a t m e n t i n t a b l e B.3. The d a t a f o r these c a l c u l a t i o n s came from annual l a b o u r survey d a t a c o l l e c t e d by the Department of Government B u d g e t i n g and s t a t i s t i c s (DGBAS). 24 In t h i s c a l c u l a t i o n female l a b o u r was counted i n male e q u i v a l e n t t i m e , so t h a t i t would be comparable t o the l a b o u r from o f f - f a r m a c t i v i t y by females (the use of the d a i l y a g r i c u l t u r a l wage and the d a i l y m a n u f a c t u r i n g wage t o c a l c u l a t e l a b o u r days from the o f f - f a r m income of females t r a n s f o r m s t h i s female l a b o u r i n t o male e q u i v a l e n t l a b o u r ) . 25 T h i s c o n s o l i d a t i o n was not an ownership c o n s o l i d a t i o n . The f i e l d s , i r r i g a t i o n and road network were r e d e s i g n e d i n t o a more r a t i o n a l p a t t e r n . Farmers r e c i e v e d 95-97% of t h e i r l a n d back a f t e r the c o n s o l i d a t i o n ( a c c o r d i n g t o my i n t e r v i e w s of farmers i n 1980. The farmers a l s o i n d i c a t e d t h a t they were v e r y s a t i s f i e d w i t h the r e s u l t s of the c o n s o l i d a t i o n , a l t h o u g h they had o n l y r e l u c t a n t l y a c c e p t e d i t i n 1978). 26 Another consequence of. the s e l e c t i o n p r o c e d u r e of the sample i s t h a t the q u e s t i o n of how and why farm households d e c i d e on t h e i r farm s i z e and l e v e l of p a r t i c i p a t i o n cannot be a d d r e s s e d d i r e c t l y . Even i f the i n f o r m a t i o n on the q u a l i t y of the h o u s e h o l d members and on the l a n d r e n t a l s had been r e t a i n e d , t h i s q u e s t i o n c o u l d not be answered because of the s e l e c t i o n method. I f the sample had o n l y been farmers who responded f o r a l l n i n e y e a r s , then the farm household's changes of farm s i z e and p a r t i c i p a t i o n l e v e l s c o u l d be t r a c e d and i n v e s t i g a t e d over t h e s e n i n e y e a r s . In t h i s c a s e , the d e c i s i o n c o u l d be t r a c e d i n terms of the household's economic c o n d i t i o n s and p e r s o n a l c h a r a c t e r i s t i c s . I f on the o t h e r hand, every year a f u l l y random sample was drawn then a g a i n the above q u e s t i o n c o u l d be a d d r e s s e d . In t h i s c a s e the sample would r e f l e c t the n a t i o n ' s change i n p r o p o r t i o n s of s m a l l and p a r t - t i m e farms so t h a t these changes c o u l d be r e l a t e d t o the a g r i c u l t u r a l s e c t o r ' s c o n d i t i o n s . But the Farm Record Keeping F a m i l y sample i s a mix of b o t h s e l e c t i o n methods. S i z e and p a r t i c i p a t i o n a r e thus - h o u s e h o l d c h a r a c t e r i s t i c s whose consequences f o r f a r m i n g p r o d u c t i v i t y a r e the s u b j e c t of t h i s s t u d y . T h i s approach i s the s t a n d a r d one i n the s t u d i e s where o n l y the e f f e c t of farm s i z e i s i n v e s t i g a t e d . In t h e s e s t u d i e s , even though a working l a n d r e n t market e x i s t s , the l a n d s i z e i s taken as a g i v e n c h a r a c t e r i s t i c of the farm and i t s consequences a r e then i n v e s t i g a t e d . See the l i t e r a t u r e o v e r v i e w i n c h a p t e r f o u r . 55 CHAPTER IV PRODUCTION PATTERNS AND SIMPLE PRODUCTIVITY MEASURES A. INTRODUCTION In t h i s c h a p t e r , an i n v e s t i g a t i o n of the p r o d u c t i o n s t r u c t u r e of the s m a l l f u l l - t i m e , s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms w i l l p r o v i d e the answers t o the f o l l o w i n g q u e s t i o n s about the s u p e r i o r i t y of the l a r g e f u l l - t i m e farms: 1) Do l a r g e f u l l - t i m e farms make the b e t t e r use of the a v a i l a b l e l a n d ( h i g h e r p r o d u c t i o n and y i e l d s per l a n d u n i t ) than s m a l l f u l l - t i m e and s m a l l p a r t - t i m e , farms? 2) Are l a r g e f u l l - t i m e farms more r e s p o n s i v e t o new c i r c u m s t a n c e s , so d i d they produce the newly demanded a g r i c u l t u r a l p r o d u c t s of the 1970s e a r l i e r and a l s o adopt the new p r o d u c t i o n methods e a r l i e r ? 3) Do l a r g e f u l l - t i m e farms save and i n v e s t more per h e c t a r e than s m a l l farms? A d d i t i o n a l l y , t h i s i n v e s t i g a t i o n can be used t o i d e n t i f y the markets which would be s e r i o u s l y d i s t u r b e d i f a l a n d r e f o r m p o l i c y were implemented i n which a l l s m a l l farms were amalgamated i n t o l a r g e farms each owned (or o p e r a t e d ) by one h o u s e h o l d who agreed t o farm f u l l - t i m e . In s e c t i o n B, the l i t e r a t u r e i s r e v i e w e d on the e f f i c i e n c y of the d i f f e r e n t farm s i z e s i n the A s i a n r e g i o n 56 as measured by land productivity measures. In particu l a r , the development of the discussion in the Indian context i s reviewed because that debate brought out the strength and the weaknesses of the land productivity measures and i s thus relevant to thi s chapter. In section C, the multi-characteristic dummy variable regression approach to the comparison of the production structure between farm types is explained. This dummy variable model uses a l l of the farm type data available while keeping the interpretation s u f f i c i e n t l y clear to be useful. Thus in the text we concentrate on the small f u l l - t i m e , small part-time and large full-time farms but the regression equations given in appendix D also provide information about the behaviour of medium (M) farms, the farms which are not so extreme in their levels of pa r t i c i p a t i o n ( P T 2 , P T 1 ) and the time e f f e c t s . (A s l i g h t l y modified form of this dummy variable model w i l l be used in chapter V.) The production structure i s investigated in sections D-G, with a discussion of the labour and machine use and the family endowment structure in section D, the output structure in section E, and the intermediate input structure in section F. Simple measures of y i e l d and land use, together with the saving-investment behaviour are discussed in section G. 57 The d i s c u s s i o n s i n s e c t i o n s D t o G a r e o r g a n i z e d such t h a t the d i f f e r e n c e s between farm types are p o i n t e d out f i r s t . These d i f f e r e n c e s i n d i c a t e what would happen t o the a g r i c u l t u r a l markets i n the v e r y s h o r t run i f a l l s m a l l f u l l - t i m e and s m a l l p a r t - t i m e farms were.amalgamated i n t o l a r g e farms, each owned (or o p e r a t e d ) by one farm household who agreed t o farm f u l l - t i m e . Long term a d j u s t m e n t s t o the new market s i t u a t i o n s cannot be a s c e r t a i n e d , s i n c e t h i s would r e q u i r e i n f o r m a t i o n about the demand f o r a g r i c u l t u r a l p r o d u c t s and the s u p p l y of i n p u t s t o the a g r i c u l t u r a l s e c t o r . However, those markets where major immediate adju s t m e n t s would o c c u r from t h i s r e o r g a n i z a t i o n of the f a r m i n g s e c t o r can be i d e n t i f i e d . S e c o n d l y , t h e t i m i n g of the a d o p t i o n of machine use, of n o n - t r a d i t i o n a l c r o p s (such as v e g e t a b l e , f r u i t s ) and of new i n t e r m e d i a t e i n p u t s (such as i n s e c t i c i d e s , h e r b i c i d e s ) a r e d i s c u s s e d i n the c a s e s where t h e r e i s a d i f f e r e n c e between the s m a l l and l a r g e farms. These a c t i v i t i e s were the r e l e v a n t response t o the new p r o d u c t i o n c i r c u m s t a n c e s of the 1970s i n T a i w a n 1 . T h i s d i s c u s s i o n i s t h u s a t e s t of the assumption of s u p e r i o r r e c e p t i v i t y of l a r g e f u l l - t i m e farms t o new c i r c u m s t a n c e s . I f l a r g e f u l l - t i m e farms are f a s t e r a t a d o p t i n g new a c t i v i t i e s then they s h o u l d show l a r g e r v a l u e s i n 1972 f o r the a c t i v i t i e s which were i n t r o d u c e d b e f o r e 1972, and t h e r e s h o u l d be e v i d e n c e of a c a t c h i n g up by s m a l l farms i n the 1970s. For a c t i v i t i e s which were 58 introduced after 1972 (where s t a r t i n g values are s i m i l a r ) , there should be s i g n i f i c a n t l y higher adoption in the early part of the 1970s on large rather than on small farms. Thirdly, an attempt i s made to describe the production choice behaviour of the d i f f e r e n t farm groups by linkin g the differences in the supply of family inputs (=endowments) to the differences of the output, the intermediate input, the bought labour inputs structure and to the y i e l d and land use measures. These lin k s show the adjustment strategies of the farm households to their input endowments and to the c h a r a c t e r i s t i c s of their farm a c t i v i t y . On the one hand, adjustments to the d i f f e r e n t family input endowments i s possible by compensation with substitute inputs. Thus the evidence of s u b s t i t u t a b i l i t y between family labour and hired labour, hired animal and machine services and owned machines i s of interest. On the. other hand, adjustment to the d i f f e r e n t family endowments i s also possible through the choice of outputs. In t h i s case, farms behave in a way that is analogous to countries in international trade, choosing output patterns suited to their (immobile) input endowment r a t i o s 2 . Thus the lack of markets for immobile family factors need not lead to ef f i c i e n c y losses for the system i f there are instead s u f f i c i e n t crop choices so that farmers can choose their crops according to their factor endowment structure. 5 9 Section H is the conclusion and provides the answers to the questions of thi s chapter. (The estimated dummy variable regressions which were the base for the tables in this chapter are reported in appendix D. More d e t a i l on the construction of the y i e l d and land use variables can be found in appendix A.) B. LITERATURE The discussion on the e f f i c i e n c y of farms of dif f e r e n t sizes in Asia started in 1962 with an a r t i c l e by Sen (1962) in which he made the following observations on Indian farm data for 1954-5, (repeated in Sen 1975, p147): "Observation I: When family labour employed in agriculture is given an 'imputed value' in terms of the ruling wage rate much of Indian agriculture seems unrenumerative. II: By and large, the ' p r o f i t a b i l i t y ' of agriculture increases with the size of holding, ' p r o f i t a b i l i t y ' being measured by the surplus (or d e f i c i t ) of output over costs including the imputed value of labour. I l l : By and large, productivity per acre decreases with the size of holding." These observations started a heated discussion which raged between 1962 and 1973 and which was mostly concerned with the land productivity of the farms (the t h i r d observation). Sen (1962) explained his results by maintaining that family labour does not command the market wage on small farms so that more labour per acre i s used. Since a l l other factors of production are proportional to the labour input there 60 w i l l be more output per a c r e on s m a l l farms. He a l s o uses the argument t h a t b u l l o c k l a b o u r i s i n d i v i s i b l e i f no s e r v i c e market e x i s t s so t h a t the b u l l o c k per a c r e i n p u t i s h i g h e r on s m a l l farms and, s i n c e the o t h e r v a r i a b l e f a c t o r s are i n a complementary r e l a t i o n s h i p w i t h i t , more output per a c r e w i l l be produced. A second s e t of arguments c o n c e n t r a t e d on the c o r r e c t d e f i n i t i o n of l a n d a r e a which s h o u l d be used i n the c a l c u l a t i o n of l a n d p r o d u c t i v i t y . The use of c u l t i v a t a b l e l a n d c o u l d g i v e m i s l e a d i n g r e s u l t s . Sen (1964) argued t h a t s m a l l farms had more f e r t i l e l a n d because p o p u l a t i o n p r e s s u r e f o r c e d the break-up of f e r t i l e l a n d ( a l s o Khusro 1964). B h a g w a t i - C h a k r a v a r t y (1969) argued t h a t l e s s f e r t i l e l a n d i s s o l d f i r s t i n d i s t r e s s s a l e s and so t h i s i s the o n l y l a n d a v a i l a b l e f o r c o l l e c t i o n i n t o b i g g e r e s t a t e s . A l s o l a r g e r farmers have n o n - p e c u n i a r y ( p r e s t i g e ) b e n e f i t s from l a r g e but r e l a t i v e l y i n f e r t i l e e s t a t e s ( a l s o Bardhan 1973). These arguments r e l a t e d f e r t i l i t y of l a n d t o s i z e and thus t o output per a c r e . A.P. Rao (1967) argued t o o t h a t l a n d a r e a s h o u l d be c o r r e c t e d f o r f a l l o w and f o r i r r i g a t i o n l e v e l s . Rudra (1968) argued f o r the use of g r o s s a c r e s e s p e c i a l l y i f t h e r e was heavy m u l t i p l e c r o p p i n g . In t h i s s t u d y , we c o r r e c t f o r the f e r t i l i t y of the l a n d i n the c a l c u l a t i o n of the farm s i z e (see c h a p t e r I I I ) . A t h i r d s et of p o t e n t i a l e x p l a n a t i o n s of o b s e r v a t i o n I I I c o n c e n t r a t e d on the s t a t i s t i c a l a g g r e g a t i o n b i a s of the 61 d i f f e r e n t measurement s t u d i e s . Sen based h i s c o n c l u s i o n s on s i z e - c l a s s average d a t a 3 f o r seven I n d i a n r e g i o n s (1962). In 1975 Sen noted t h a t t h i s c o u l d c r e a t e a s t a t i s t i c a l i l l u s i o n because he was both a g g r e g a t i n g over v i l l a g e s and over households. The a g g r e g a t i o n over v i l l a g e s s t r e n g t h e n e d the e f f e c t of both the l a b o u r market i m p e r f e c t i o n s (which made l a b o u r immobile between v i l l a g e s , but l e s s so w i t h i n the v i l l a g e ) and the non-homogeneity of l a n d q u a l i t y a c r o s s v i l l a g e s . Thus i t was p o s s i b l e t h a t t h e p r o d u c t i v i t i e s per a c r e d i d not v a r y w i t h i n a v i l l a g e but v a r i e d c o n s i d e r a b l y between v i l l a g e s . E m p i r i c a l e v i d e n c e was l e s s than c l e a r on t h i s i s s u e (Rao A.P. 1967, Rudra 1968, S a i n i - B h a t t a c h a r y a 1972) because the d e f i n i t i o n s of a c r e a g e changed a c r o s s the " S t u d i e s . O b s e r v a t i o n I I I was not r e v e r s e d i n s t u d i e s which used household d a t a i n s t e a d of s i z e - c l a s s d a t a ( S a i n i 1971, Bardhan 1973). In t h i s c h a p t e r , the c o mparison between farm t y p e s uses c l a s s average d a t a because t h e measures of the farm c h a r a c t e r i s t i c s o n l y approximate t h e u n d e r l y i n g p o t e n t i a l source of ' i n e f f i c i e n c y (see c h a p t e r I I I ) . Sen's o b s e r v a t i o n s I and I I were e s s e n t i a l l y i g n o r e d d u r i n g t h i s p e r i o d . Only Khusro (1964) p a i d some a t t e n t i o n t o the r e l a t i o n s h i p between the net p r o f i t ( a f t e r i m p u t a t i o n of v a l u e t o f a m i l y s u p p l i e d non-land i n p u t s ) and s i z e . S a i n i (1969) saw t h a t the p r o d u c t i v i t y of d i f f e r e n t farm s i z e s was a s p e c i a l case of a t o t a l f a c t o r p r o d u c t i v i t y i n v e s t i g a t i o n and thus s h o u l d not s o l e l y c o n c e n t r a t e on l a n d 62 productivity. Bardhan's study in 1973 es s e n t i a l l y introduced the next stage of the debate on farm size e f f i c i e n c y by pointing out that the real issue of size i s whether the technology showed increasing returns to scale". He proceeded to estimate production functions of a l l factors and found that decreasing or constant returns to scale was the rule in ri c e regions (but increasing returns to scale in wheat regions in India). Bardhan did indicate that large farms might contribute to growth even i f they were s t a t i c a l l y i n e f f i c i e n t because they could save more and so invest more. Thus the optimal farm size debate in the Indian context e s s e n t i a l l y brought out both the usefulness and the limitation's of the land productivity measures. These measures continue to be very popular. As Census data usually provides s u f f i c i e n t information for their c a l c u l a t i o n , they can be used for cross country evaluations of the farm -size issue. Thus Barry and Cline (1979) found that land productivity consistently f a l l s with size in the P h i l l i p i n e s , West Pakistan and Malaysia 5. The scant evidence on farm size e f f i c i e n c y in Taiwan also uses these measures (Chen 1980). C. EMPIRICAL METHOD: THE DUMMY VARIABLE MODEL This study concentrates on the differences in production patterns and production e f f i c i e n c y between small 63 f u l l - t i m e , s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms, but d a t a i s a l s o a v a i l a b l e on o t h e r farm t y p e s . A l s o the t i m i n g of some p r o d u c t i o n v a r i a b l e s i s of i n t e r e s t i n t h i s study because of the i n t e r e s t i n d i f f e r e n t i a l a d o p t i o n r a t e s , and so i s the agronomic r e g i o n . A method of da t a a n a l y s i s had t o be found which made i n t e r p r e t a t i o n s i m p l e but a l s o i n c o r p o r a t e d a l l the a v a i l a b l e d a t a . The dummy v a r i a b l e model was choosen as the s i m p l e s t a p p r o x i m a t i o n t o the method of comparing the s i g n i f i c a n c e of the d i f f e r e n c e s i n the mean v a r i a b l e s f o r a l l the d i f f e r e n t groups of o b s e r v a t i o n s . Four c l a s s i f i c a t i o n c h a r a c t e r i s t i c s , s i z e ( s ) , p a r t i c i p a t i o n ( p ) , r e g i o n ( r ) , and time ( t ) , a r e c o n s i d e r e d i n t h i s s t u d y , p r o d u c i n g a t o t a l of 432 c e l l s (s=3, p=4, r=4, t=9) where each c e l l s h o u l d have a t l e a s t 20 o b s e r v a t i o n s f o r r e l i a b l e e s t i m a t i o n . The comparison of a l l the group averages would produce 432!/[2!(432-2)!] c o m p u t a t i o n s per e f f i c i e n c y measure. T h i s i s too many t o e s t i m a t e and y e t no da t a s h o u l d be d i s c a r t e d 6 . We propose the f o l l o w i n g dummy v a r i a b l e model on a l l the o b s e r v a t i o n s f o r each e f f i c i e n c y measure: 2 3 8 3 a = a0 + L a d + Z a d + Z a d + Z a d + e s p r t s=1 s s p=1 p p t=1 t t r=1 r r s p r t where: s: s i z e p: p a r t i c i p a t i o n r : r e g i o n t : time 64 so that each c h a r a c t e r i s t i c i=s,p,t,r has i t s own dummy variable d . The dependent variable (a ) i s the sptr observation on an e f f i c i e n c y measure or a production variable for the farmer. The focus of this study is thus the average (or expected) e f f i c i e n c y level of the farmers who belong to the di f f e r e n t groups. For example, the average (or expected) e f f i c i e n c y l e v e l of the farmers who belong to the small, low participant, 1979, North Rice region group (s=S, p=LP, t=l979, r=NR) i s : E(a ) = a = a + a + a + a + a S,LP,1979,NR S,LP,1979,NR 0 S LP 1979 NR As can be seen, i t is easy to id e n t i f y s h i f t s in the average e f f i c i e n c y l e v e l from group to group. The c o e f f i c i e n t (a ) i of each dummy variable (d ) indicates the value of the s h i f t i and the t-test on the c o e f f i c i e n t shows whether t h i s s h i f t is s t a t i s t i c a l l y s i g n i f i c a n t . The disadvantage of the dummy model i s that some regularity i s imposed on the pattern of c e l l means i f more than one c h a r a c t e r i s t i c i s considered. One solution would be to add interaction dummy terms (d d ), but thi s expands s p the number of c o e f f i c i e n t s to estimate 7. Therefore, the disadvantage of the simple model without interaction terms must be weighted against the advantages of the c l a r i t y of interpretation of a few c o e f f i c i e n t s and the constraints of the number of observations. 6 5 It could be argued that a better model would be the simple regression model of the e f f i c i e n c y measure as a lin e a r function of size, p a r t i c i p a t i o n l e v e l and time, since each was a numerical measure before i n t e r v a l s were defined. This also imposes a regularity on the data and there i s no a p r i o r i reason for assuming that the relationships are linear in the c h a r a c t e r i s t i c s . The second reason why we prefer the dummy model (against the linear regression model) i s that each of the measures of the c h a r a c t e r i s t i c s i s in fact an approximation for the true variable of influence (see discussion in chapter I I I ) . Thus the size i s an approximation for scale of production, the p a r t i c i p a t i o n l e v e l for the residual aspect of farming, the time period for the weather conditions and the technological trends, and the region for the homogeneous agronomic area. Because of the approximate q u a l i t y of the measured c h a r a c t e r i s t i c s we f e l t that i t was more appropriate to study households as belonging to classes (measured by belonging to a value i n t e r v a l of their c h a r a c t e r i s t i c s ) . Thus there w i l l be two dummy variables (d ) associated with farm size (s = S, M) and three s associated (d ) with p a r t i c i p a t i o n l e v e l (p = PT2, PT1, LP), P while the constant (a ) of the regression i s the value l e v e l 0 for the large full-time farm (the base l e v e l from which the s h i f t s a , a are calculated), s p 66 We d e c i d e d t o e s t i m a t e a dummy model f o r each r e g i o n because the f o u r r e g i o n s a r e v e r y d i s s i m i l a r . The d i v i s i o n of the t o t a l sample i n t o f o u r r e g i o n a l samples a l s o a l l o w s an i n v e s t i g a t i o n of the r o b u s t n e s s of the s h i f t s t h a t s i z e , p a r t i c i p a t i o n and time impose on the v a r i a b l e s . For each e f f i c i e n c y measure (or p r o d u c t i o n v a r i a b l e ) f o u r r e g r e s s i o n s are thus e s t i m a t e d , so t h a t i t may be shown whether s h i f t s o c c ur i n the same d i r e c t i o n f o r a l l r e g i o n s . The c o n c l u s i o n about the i n f l u e n c e of the farm c h a r a c t e r i s t i c w i l l then be s t r o n g e r . The e s t i m a t i o n of the time t r e n d w i t h the time dummy v a r i a b l e s (d ) g i v e s ah average of the t r e n d i n a l l farm t s i z e s . But the assumption t h a t l a r g e farms adopted new te c h n o l o g y and c r o p s f a s t e r ( i n the e a r l y 1970s w h i l e s m a l l farms d i d not yet adopt them) must be t e s t e d . We t e s t t h i s a ssumption by adding two i n t e r a c t i o n terms (d d ) between s b the s i z e (s = M, S) and the f i r s t f i v e y e a r s of the sample; they a r e the 'break' dummy v a r i a b l e s (d = 1 i f t = 1972, b 1973,1974,1975,1976, o t h e r w i s e d = 0 ) 8 . Thus whenever t h i s b break c o e f f i c i e n t i s i n s i g n i f i c a n t , one can c o n c l u d e t h a t s m a l l and l a r g e farms shared t h e same a d o p t i o n t r e n d t h r o u g h o u t ' t h e 1970s. So f o r each r e g i o n , t h e model e s t i m a t e d i s : 2 3 8 2 a = a + L a d + Z a d + L a d + Z a d d + e 0 s=1 s s p=1 p p t=1 t t s=1 bs b s 67 We assume t h a t the o r d i n a r y l e a s t square assumptions h o l d E [ e ] = 0 E [ e 1 e ] = a1 E[ed] = 0 The d i s c u s s i o n s i n the t e x t w i l l be based on these e s t i m a t e d r e g r e s s i o n s by c a l c u l a t i n g the e s t i m a t e d v a l u e f o r each v a r i a b l e i n 1980: - f o r s m a l l f u l l - t i m e farms: a = a + a SFT 0 S - f o r s m a l l p a r t - t i m e farms: a = a + a + a SPT 0 S LP - f o r l a r g e f u l l - t i m e farms: a = a LFT 0 D. FAMILY ENDOWMENT, LABOUR AND MACHINE USE PATTERN F a m i l y endowments a r e the f a m i l y l a b o u r , male and female, and the farm a s s e t s taken per h e c t a r e e q u i v a l e n t l a n d . F a m i l y l a b o u r was r e p o r t e d i n a c t u a l days used. Farm a s s e t v a l u e s a r e the sum of farm i n v e n t o r y 9 , farm t o o l s and machines, t r e e s , and l i v e s t o c k as r e p o r t e d a t the b e g i n n i n g of the p r o d u c t i o n year and d e f l a t e d w i t h a c o n s t r u c t e d a s s e t p r i c e i n d e x 1 0 . The main f e a t u r e of the f a m i l y endowment p a t t e r n as r e p o r t e d i n t a b l e 4.1 i s t h a t l a r g e f u l l - t i m e farms have s i g n i f i c a n t l y l e s s f a m i l y l a b o u r per c u l t i v a t e d h e c t a r e (a T a b l e 4.1: LABOUR USE, MACHINE USE and FAMILY ENDOWMENTS per HECTARE i n 1980 i n f o u r r e g i o n s f o r SMALL FULL-TIME (SFT), LARGE FULL-TIME (LFT) and SMALL PART-TIME (SPT) FARMS Region | North R i ce I Mid r i ce I South R i c e I Sugar Farm group | SFT LFT SPT | SFT LFT SPT SFT LFT SPT | SFT LFT SPT TOT HUM 705* 258" 303 568* 301 " 271 501 * 201 " 318* 625* 281 " 314 MALE FAM LAB 464* 160" 208 330* 201 " 126* 288* 113" 162* 318* 134" 128 FEM FAM LAB 142* 48" 59 185* 76" 85 173* 30 99* 27 1 * 109" 141 HIRED HUM 99 50 36 54 24 60 40** 58" 57 34 37 43 ANIMAL LAB 1 . 54 . 1 1 .62 . 35 - . 19 + 2 . 27 2.91 .57 6 . 66* 4 .09 2 .08 4 . 53 MACHINE HIR 1 .99* 1.02" 2 . 65* 1 .99 1 . 79" 2.97* 2 . 42 2 .03" 2 . 78* 1.21 1 . 24" 1 . 05 MACHINE OWN 60788* 28802" 62467* 567 19 65823" 47663 55520 49206" 67175 44062* 26968" 32706 ENDOWMENT T FAM LAB 506* 208 " 267 515* 277" .21 1 461* 143" 26 1 * 589* 244" 269 T FARM ASS 123158 104515" 1 12168 133113 143222" 134242 107393 94001" 133601 98217* 63497" 69966 %DRY LAND . 16* .30" .04* . 12 .09 .03 . 29 . 22" . 15 . 30 . 21 " . 28 Source: based on t a b l e s D.1-4 Notes: a: q u a n t i t i e s per h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e land area b: type of lab o u r above: Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T farm a s s e t c: p r i c e 1n 1980 : ' 383.24 345.93 4592.64 1 1 d: u n i t s r e p o r t e d above: man-days man-days man-days day ha s e r v i c e d stock v a l u e s t o c k v a l u e e: Tot hum: f a m i l y labour + h i r e d human labour f : T fam l a b : male + female f a m i l y labour (man-days) g: T farm a s s : machine owned + t r e e s + l i v e s t o c k + t o o l s + miscaleneous farm d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r , 1980$ ) h: % d r y la n d : d r y l a n d as share i n the paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a v a i l a b l e ": s i g n i f i c a n t l y d i f f e r e n t from z e r o ( s i g n i f i c a n c e l e v e l .05) *: u s u a l l y means t h a t the base v a l u e was c o n s i d e r a b l y l a r g e r i n the e a r l y 1970s than i n 1980 *: s i g n i f i c a n t l y d i f f e r e n t from l a r g e f u l l - t i m e farms CT) 69 minimum of 250 days less) than small full-time farms, and less or equal amounts than small part-time farms. Secondly, land quality i s equally d i s t r i b u t e d over a l l farm types in a l l regions, except in the NR region where there i s s i g n i f i c a n t l y more dry land on large full-time farms than on other farm types. And t h i r d l y , farm asset endowments are equal on the farm types in the ric e regions, but in the SUG region small full-time farms have s i g n i f i c a n t l y more farm assets per hectare. An amalgamation of small farms would dramatically a l t e r family labour application per hectare, but not the amounts of farm assets per hectare. Amalgamation would mean a loss of employment of at least 250 (NR) days per year for every hectare consolidated i f occupied by small full-time farms. Alternative employment would have to be found for the farm household members thus dispossessed. The labour and machine inputs consist of family labour, hired human, hired animal, hired machine services and owned machine services. The hired human labour was reported in days employed 1 1. The hired machine services were calculated from the machine cost with the use of the machine service p r i c e 1 2 . The hired animal s e r v i c e s 1 3 were calculated s i m i l a r l y . The owned machine services are assumed to be proportional to the owned machine stock and the l a t t e r was deflated with the machine and tool index 1". 70 The i n v e s t i g a t i o n of the use of n o n - f a m i l y l a b o u r and s e r v i c e s , be they human, a n i m a l or h i r e d machine or owned machine, as r e p o r t e d i n t a b l e 4.1, shows t h a t l a r g e f u l l - t i m e farms tend t o use l e a s t of these per h e c t a r e , a l t h o u g h the d i f f e r e n c e s a r e not s i g n i f i c a n t between f u l l - t i m e farms. S m a l l p a r t - t i m e farms do use s i g n i f i c a n t l y more h i r e d machine s e r v i c e s per h e c t a r e than l a r g e f u l l - t i m e farms i n the r i c e r e g i o n s and more a n i m a l l a b o u r per h e c t a r e t o o i n the SR r e g i o n . (The NR s i g n i f i c a n t d i f f e r e n c e between l a r g e f u l l - t i m e and s m a l l farm f o r machine i n p u t per h e c t a r e i s t i e d t o the s i g n i f i c a n t l y h i g h e r dry l a n d q u a l i t y on l a r g e f u l l - t i m e farms, making r i c e machine use d i f f e r e n t . ) An amalgamation would not s i g n i f i c a n t l y change the h i r i n g of human l a b o u r per h e c t a r e . The d i s p o s s e s s e d f a m i l y l a b o u r would not be h i r e d by the newly formed l a r g e farms. T h i s would mean t h a t t o t a l a g r i c u l t u r a l l a b o u r employment would f a l l h e a v i l y . I t s h o u l d a l s o be noted t h a t h i r e d l a b o u r amounts have not been v e r y r e s p o n s i v e t o the r a p i d wage i n c r e a s e s of the s e v e n t i e s ( t r e n d s i n t a b l e s D.1-4 a r e i n s i g n i f i c a n t ) , so t h a t i t i s not l i k e l y t h a t even d r a m a t i c d e c r e a s e s i n a g r i c u l t u r a l wages would i n c r e a s e h i r i n g s u f f i c i e n t l y t o employ the d i s p o s s e s s e d f a m i l y l a b o u r . G e n e r a l l y l e s s machine s e r v i c e s and a n i m a l s e r v i c e s would be employed on the l a n d , c r e a t i n g a d i s t u r b a n c e i n these m arkets. 71 L o o k i n g f o r the e v i d e n c e of s u b s t i t u t i o n b ehaviour between f a m i l y l a b o u r , h i r e d human l a b o u r , and machine s e r v i c e s i n response t o the r i s i n g r e l a t i v e w age 1 5 or a c r o s s farms, t h r e e o b s e r v a t i o n s can be made. F i r s t l y , the break c o e f f i c i e n t s were a l l i n s i g n i f i c a n t which means t h a t s m a l l and l a r g e farms shared the same t r e n d s and t h a t the a d o p t i o n speed of the new mechanized methods i s s i m i l a r . S e c o n d l y , a l l farms responded t o t h e - d e c l i n i n g r e l a t i v e c a p i t a l c o s t w i t h an i n c r e a s e i n machine use per h e c t a r e , h i r e d and owned ( t r e n d u p ) , and w i t h a n o n s i g n i f i c a n t d e c r e a s e i n h i r e d l a b o u r per h e c t a r e ( t r e n d down) but f a m i l y l a b o u r amounts per h e c t a r e d i d not a l t e r (the t r e n d s are r e p o r t e d i n t a b l e s D.1-4). T h i r d l y , a c r o s s farm t y p e s , w i t h i n a year and per h e c t a r e , l a b o u r of a l l k i n d s i s u n i f o r m l y l e s s on l a r g e f u l l - t i m e than on s m a l l f u l l - t i m e farms and almost u n i f o r m l y l e s s than on s m a l l p a r t - t i m e farms. E v i d e n c e of s u b s t i t u t i o n b e h a v i o u r o n l y appears between s m a l l f u l l - t i m e and s m a l l p a r t - t i m e farms where f a m i l y l a b o u r i s r e p l a c e d by h i r e d machine l a b o u r . The c o n c l u s i o n on the s u b s t i t u t i o n s t r a t e g i e s t h a t can be drawn from the f a m i l y endowment, l a b o u r use and machine use d a t a i s t h a t two s t r a t e g i e s have been used by the households w i t h r e s p e c t to machine use i n Taiwan i n response t o the r e l a t i v e machine c o s t d e c r e a s e (and the r e l a t i v e human l a b o u r c o s t i n c r e a s e ) . 72 Households show t h a t t h e s t r a t e g y of adjustment t o the machine c o s t d e c rease was i n t e n s i f i c a t i o n i f they were c o n s t r a i n e d t o s t a y of the same s i z e and l e v e l of p a r t i c i p a t i o n . By c o n s t r u c t i o n , the data p r e s e n t e d i s such t h a t we a r e comparing h o u s e h o l d s 'as i f ' they d i d not have the o p t i o n of changing t h e i r c h a r a c t e r i s t i c s d u r i n g the n i n e sample y e a r s 1 6 . Through t i m e , the response of t h e s e households t o the growing r e l a t i v e cheapness of machines has been t o add machines t o an unchanging l e v e l of human l a b o u r amounts per h e c t a r e . Thus l a n d has g r a d u a l l y become more i n t e n s i v e l y c u l t i v a t e d and t h i s s t r a t e g y can o n l y have been e f f i c i e n t i f output v a l u e s per h e c t a r e f o l l o w e d the same p a t t e r n of i n t e n s i f i c a t i o n . T h i s w i l l be i n v e s t i g a t e d i n the next s e c t i o n . Thus, the consequence f o r the s e c t o r of the r e l a t i v e c a p i t a l c o s t d e c r e a s e has been t h a t the t o t a l a p p l i c a t i o n of l a b o u r and m a c h i n e r y per h e c t a r e has r i s e n on a l l the farms where n e i t h e r t h e farm s i z e nor the p a r t i c i p a t i o n l e v e l changed ( o r c o u l d change). On the o t h e r hand, the h ouseholds whose p a r t i c i p a t i o n l e v e l d e c l i n e d 1 7 , were u s i n g the s t r a t e g y of s u b s t i t u t i n g human ( f a m i l y ) l a b o u r w i t h ( h i r e d ) machine s e r v i c e s . The d a t a i n our sample shows t h a t s m a l l f u l l - t i m e farms use more f a m i l y l a b o u r per h e c t a r e than s m a l l p a r t - t i m e farms but l e s s h i r e d machine s e r v i c e s . Thus, whenever the p a r t i c i p a t i o n l e v e l of a s m a l l f u l l - t i m e farm changed t h e r e was a r eplacement of f a m i l y l a b o u r w i t h 73 machine s e r v i c e s . In t h i s way, t h e r e was a s u b s t i t u t i o n of l a b o u r by machine s e r v i c e s f o r the s e c t o r through the r a p i d e x p a n s i o n of p a r t - t i m e f a r m i n g which the s e c t o r as a whole e x p e r i e n c e d . Thus, the consequences f o r the s e c t o r of the r e l a t i v e c a p i t a l c o s t d e c r e a s e (and the l a b o u r wage i n c r e a s e ) has been a s u b s t i t u t i o n out of f a m i l y l a b o u r use i n t o machine use on a l l the farms where the households d i d d e c r e a s e the p a r t i c i p a t i o n l e v e l . T h i r d l y , i n t e n s i f i c a t i o n i s a l s o the s t r a t e g y of s m a l l farms compared t o l a r g e farms i f t h e r e i s no p o s s i b i l i t y t o change the p a r t i c i p a t i o n l e v e l on s m a l l f a r m s 1 8 . The d a t a shows t h a t s m a l l f u l l - t i m e farms use more f a m i l y l a b o u r per h e c t a r e than l a r g e f u l l - t i m e farms, but n e i t h e r the machine i n p u t s not the h i r e d l a b o u r per h e c t a r e are s i g n i f i c a n t l y d i f f e r e n t ( i f a n y t h i n g , s l i g h t l y l a r g e r t o o ) . A l t e r n a t i v e l y s t a t e d , t h e r e i s no e v i d e n c e t h a t l a r g e f u l l - t i m e farms attempt t o add h i r e d l a b o u r or machine s e r v i c e s t o compensate f o r t h e i r r e l a t i v e l a c k of f a m i l y l a b o u r . And the q u e s t i o n i s then whether the output v a l u e s per h e c t a r e on s m a l l f u l l - t i m e farms are s u f f i c i e n t l y above the o u t p u t v a l u e s per h e c t a r e on l a r g e f u l l - t i m e farms t o warrant the i n t e n s i f i c a t i o n on the s m a l l f u l l - t i m e farms. For the i n v e s t i g a t i o n of the output p a t t e r n , t h r e e main o b s e r v a t i o n s w i t h r e s p e c t t o f a m i l y endowments and l a b o u r use can be r e t a i n e d . One, t h e r e i s a p a t t e r n of 74 i n c r e a s e d i n t e n s i t y of l a b o u r a p p l i c a t i o n t o l a n d when goi n g from l a r g e f u l l - t i m e t o s m a l l p a r t - t i m e t o s m a l l f u l l - t i m e farms. S e c o n d l y , the f a m i l y l a b o u r c o n t e n t of t o t a l l a b o u r use i s h i g h e s t on s m a l l f u l l - t i m e farms. T h i r d l y , i n the NR r e g i o n l a n d q u a l i t y i s s i g n i f i c a n t l y d i f f e r e n t on l a r g e farms as t h e i r l a n d has a h i g h e r dry l a n d c o n t e n t than s m a l l farms. The i n v e s t i g a t i o n of the output p a t t e r n w i l l i n d i c a t e i f t h e r e are output responses t o t h e s e l a b o u r and l a n d c o n d i t i o n s . E. OUTPUT PATTERN per HECTARE The output p a t t e r n shows the c r o p c h o i c e of the '(group) average farmer' who had one h e c t a r e a v a i l a b l e . T h i s 'average farmer' produced e i g h t e e n c r o p s , of which 10 a r e r e p o r t e d i n t a b l e 4.2. (The o t h e r e i g h t c r o p s were t o g e t h e r o n l y a s m a l l f r a c t i o n of the output v a l u e and d i d not show a s i g n i f i c a n t d i f f e r e n c e between farm t y p e s . ) The t o t a l output v a l u e s was d e f l a t e d by an index of net r e t u r n s 1 9 . Crop q u a n t i t i e s were c a l c u l a t e d from r e p o r t e d c r o p r e c e i p t s u s i n g the annual p r i c e s 2 0 . The c r o p c h o i c e p a t t e r n , as r e p o r t e d i n t a b l e 4.2, i s m a i n l y • d i f f e r e n t between farm t y p e s f o r v e g e t a b l e , r i c e and f r u i t - o r a n g e p r o d u c t i o n . The most c o n s i s t e n t p a t t e r n r e l a t e s t o v e g e t a b l e p r o d u c t i o n per h e c t a r e . S m a l l f u l l - t i m e farms produce s i g n i f i c a n t l y more v e g e t a b l e s per h e c t a r e (minimum 6800 kg more) than l a r g e f u l l - t i m e farms i n 75 a l l r e g i o n s , and i n the SUG r e g i o n s m a l l p a r t - t i m e farms a l s o produce more v e g e t a b l e s than l a r g e f u l l - t i m e farms. The r i c e p r o d u c t i o n p a t t e r n i s a l s o c o n s i s t e n t ( i f l a n d q u a l i t y i t taken i n t o a c c o u n t ) . Thus s m a l l f u l l - t i m e farms choose r i c e p r o d u c t i o n 2 1 l e s s o f t e n than l a r g e f u l l - t i m e farms and choose o t h e r c r o p s i n s t e a d . In the MR r e g i o n i t i s the s m a l l f u l l - t i m e farms which produce s i g n i f i c a n t l y l e s s r i c e but more f r u i t - s u g a r than l a r g e f u l l - t i m e farms, w h i l e s m a l l p a r t - t i m e farms produce l e s s f r u i t - s w e e t p o t a t o but s i g n i f i c a n t l y more sugar. In the SR r e g i o n s m a l l f u l l - t i m e farms a l s o produce s i g n i f i c a n t l y l e s s r i c e , f r u i t and beans but s i g n i f i c a n t l y more c e r e a l than l a r g e f u l l - t i m e farms w h i l e s m a l l p a r t - t i m e farms produce s i m i l a r c r o p s as l a r g e f u l l - t i m e farms. In the SUG r e g i o n i t i s the s m a l l p a r t - t i m e farms which produce s i g n i f i c a n t l y l e s s r i c e but more sweet p o t a t o - o r a n g e w h i l e s m a l l f u l l - t i m e farms produce l e s s r i c e but s i g n i f i c a n t l y more orange. However, i n the NR r e g i o n s m a l l f u l l - t i m e farms produce s i g n i f i c a n t l y more r i c e but s i g n i f i c a n t l y l e s s f r u i t than l a r g e farms, because of the l a r g e r d r y l a n d c o n t e n t on l a r g e f u l l - t i m e farms. The e f f e c t of t h e s e c r o p p a t t e r n s i s t h a t t o t a l output v a l u e per h e c t a r e i s s i g n i f i c a n t l y h i g h e r on s m a l l f u l l - t i m e farms than on b o t h l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms, the l a t t e r two p r o d u c i n g s i m i l a r amounts. The immediate consequences of an amalgamation would p r i m a r i l y be f e l t i n the v e g e t a b l e s and r i c e m a r k e t s 2 2 . Table 4.2: SELECTED OUTPUT AMOUNTS per HECTARE (kg/ha) i n 1980 i n f o u r r e g i o n s f o r SMALL FULL-TIME (SFT), LARGE FULL-TIME (LFT) and SMALL PART-TIME (SPT) FARMS Region | North R i c e Mid R i ce South R i c e I Sugar Farm group| SFT LFT SPT SFT LFT SPT SFT LFT SPT SFT LFT SPT RICE 5827* 4272" 7303* 5906* 9047" 8644 5039* 6270" 5923 2315 3289" 1097* SWEET POT 490 230 -197 + -122 + 92 - 120 + -477 + -96 + 668 630 32 1562 SUGAR 131 207 -30 + 1439 -961 + 4318* 13882 5594 1 1516 27698 28692" 20987 VEGETABLES 33650* 11404" 1 1408 14409* 7572" 4651 14705* 3044 2736 12927* 5691 " 10535* ORANGE 99 279" 71 -37 -56 + 86 67 20 -28 + 996* -883 503 FRUIT 261* 1058" -6- 5560 2612 926 2673* 4723" 2938 4406 3358" 306 1 CEREAL 74 41 17 91 - 19 + 170 314* -12 + 87 619 886" 677 SPECIAL CRO 5 210 500 243 69 -31 + 30 1 -84 + 39 540 334" 147 HOG 578 121 -382 1810 1 105 828 7 13 800 837 215 257 -96 POULTRY(an) 89 38 69 91 15 103 100 54 96 76 4 -21 + BEANS 706* 1272" 633* DRY LAND% . 16* .30" .04* . 12 .09 .03 . 29 . 22" . 15 .30 .21" . 28 OUTPUT ($) 355874* 184372" 170814 375749* 27 1765" 241289 295176 237641" 227826 240165* 165290" 134475 RICE 1972 SW POT 1972 VEGET 1972 FRUIT 1972 HOG 1972 DRY L 1972 4831 460 4372 789 6207* 193* 6239 . 18 6978" . 23 8961* .09 2174* 880 3319* 5970* 1060 3431 638 3578 759 Source: based on t a b l e s D.5-8 Notes:a: per h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e land area b: P r i c e s 1980: Rice: 14.32 NT$/kg; Sweet Potato: 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; 0range:9.066 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; Hog: 48.258 NT$/kg; P o u l t r y : 129 NT$ per animal * s i g n i f i c a n t l y d i f f e r e n t from z e r o ( s i g n i f i c a n c e l e v e l .05) u s u a l l y means that the base v a l u e was c o n s i d e r a b l y l a r g e r i n the e a r l y 1970s than i n 1980 s i g n i f i c a n t l y d i f f e r e n t from l a r g e f u l l - t i m e farms cn 77 There would be a s i g n i f i c a n t f a l l (minimum 6837 kg per h e c t a r e ) i n the p r o d u c t i o n of v e g e t a b l e s , i n p r o p o r t i o n t o the e x i s t i n g area o c c u p i e d by s m a l l f u l l - t i m e farms i n the r i c e r e g i o n s and i n p r o p o r t i o n t o the t o t a l a r e a o c c u p i e d by s m a l l farms i n the SUG r e g i o n . The ownership c o n s o l i d a t i o n would a l s o produce a r i c e p r o d u c t i o n i n c r e a s e 2 3 . G e n e r a l l y , c o n s o l i d a t i o n of s m a l l farms would d e c r e a s e the amount of output produced per h e c t a r e e s p e c i a l l y because of the c o n s o l i d a t i o n of the more p r o d u c t i v e s m a l l f u l l - t i m e farms. That l a r g e f u l l - t i m e farms a r e more d e s i r a b l e because they s w i t c h f a s t e r ( e a r l i e r ) t o the newly p r e f e r r e d c r o p s w h i l e s w i t c h i n g e a r l i e r out of t r a d i t i o n a l c r o p s i s not s u p p o r t e d by the e v i d e n c e . Modern c r o p s a r e v e g e t a b l e s and f r u i t s and t r a d i t i o n a l c r o p s a r e r i c e , s u g a r , sweet p o t a t o . Only i n the NR r e g i o n have s m a l l farms i n c r e a s e d r i c e p r o d u c t i o n and d e c r e a s e d f r u i t p r o d u c t i o n w h i l e l a r g e f u l l - t i m e farms d i d not a l t e r t h e i r p r o d u c t i o n . In the e a r l y 1970s, i n the MR r e g i o n l a r g e f u l l - t i m e farms i n c r e a s e d t h e i r r i c e p r o d u c t i o n s i g n i f i c a n t l y more than s m a l l farms, and i n the SR r e g i o n t h e y d i d not d e c r e a s e the sweet p o t a t o p r o d u c t i o n as d r a s t i c a l l y as s m a l l farms. In the SUG r e g i o n v e g e t a b l e p r o d u c t i o n rose s i g n i f i c a n t l y l e s s and hog p r o d u c t i o n d e c l i n e d s i g n i f i c a n t l y l e s s on l a r g e farms than on s m a l l farms. We c o n c l u d e t h a t , i f t h e r e are s i g n i f i c a n t l y d i f f e r e n t time t r e n d s i n c r o p p r o d u c t i o n , they a r e g e n e r a l l y not i n f a v o u r of l a r g e farms. 78 The output p a t t e r n shows c l e a r l y t h a t households are c h o o s i n g c r o p c o m b i n a t i o n s which a r e r e l a t e d t o t h e i r f a m i l y endowments and t o the l a b o u r use p a t t e r n . Both the t o t a l q u a n t i t y of output per h e c t a r e and the c r o p c o m b i n a t i o n s are i n f l u e n c e d . F i r s t l y , l a n d q u a l i t y m a t t e r s f o r the p r o d u c t i o n c h o i c e as can be seen by comparing farm t y p e s i n the NR r e g i o n . In the NR r e g i o n , the dry l a n d p r o p o r t i o n i s s i g n i f i c a n t l y h i g h e r on l a r g e than on s m a l l farms. The consequence i s a s i g n i f i c a n t r e d u c t i o n of r i c e (paddy l a n d c r o p ) but a s i g n i f i c a n t i n c r e a s e i n f r u i t p r o d u c t i o n (dry l a n d c rop) and a tendency on l a r g e farms towards more dry l a n d c r o p s such as ' s p e c i a l ' c r o p s , orange, sugar. I t s h o u l d be noted t h a t the machine use ( h i r e d , owned) per h e c t a r e was a l s o s i g n i f i c a n t l y lower on l a r g e farms because e x i s t i n g machines are m o s t l y r i c e r e l a t e d . In the MR and SR r e g i o n t h e r e i s no s i g n i f i c a n t l a n d q u a l i t y d i f f e r e n c e and so t h e r e was no paddy-dry c r o p s w i t c h i n g between farm t y p e s 2 *. S e c o n d l y , the amount of l a b o u r i n p u t per h e c t a r e i n f l u e n c e s the t o t a l o u tput per h e c t a r e and the f a m i l y l a b o u r c o n t e n t i n f l u e n c e s the c r o p output c o m b i n a t i o n s when comparing s m a l l f u l l - t i m e and l a r g e f u l l - t i m e farms. But s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms show n e a r l y the same output s t r u c t u r e . 79 a) C o n s i d e r i n g the p r o d u c t i o n p a t t e r n per c u l t i v a t e d h e c t a r e , the major d i f f e r e n c e between s m a l l f u l l - t i m e and l a r g e f u l l - t i m e farms i s t h a t f a m i l y l a b o u r amounts a r e n e a r l y 300 days h i g h e r on s m a l l f u l l - t i m e than on l a r g e f u l l - t i m e farms (see t a b l e 4.1). The o t h e r l a b o u r i n p u t s are s i m i l a r between the two farm t y p e s . The r e s u l t (as seen i n t a b l e 4.2) i s t h a t the t o t a l output v a l u e i s s i g n i f i c a n t l y h i g h e r , a minimum of 75000 NT$, on the s m a l l f u l l - t i m e farm ( i n s i g n i f i c a n t l y so i n the SR r e g i o n ) . But the h i g h e r f a m i l y l a b o u r c o n t e n t on s m a l l f u l l - t i m e farms does not u n i f o r m l y expand a l l c r o p s : the s u p e r v i s i o n s e n s i t i v e v e g e t a b l e c r o p expands more than any o t h e r c r o p by a minimum of 6800 kg, w h i l e the mechanized r i c e c r o p d e c l i n e s as can be seen i n the MR,.SR, and SUG r e g i o n . b) The d i f f e r e n c e between l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms i s not s t r o n g i n terms of l a b o u r i n p u t s , but s t i l l , l a r g e f u l l - t i m e farms have a tendency t o use l e s s l a b o u r i n p u t ( s i g n i f i c a n t l y so i n SR r e g i o n ) . The o u t p u t v a l u e on the o t h e r hand, has a tendency t o be h i g h e r on l a r g e f u l l - t i m e farms. The c r o p output c o m b i n a t i o n s do not d i f f e r between farm t y p e s (except i n the SUG r e g i o n where the s m a l l p a r t - t i m e farm produces more, v e g e t a b l e s but l e s s r i c e ) . The c o n c l u s i o n t h a t can be drawn from the output p a t t e r n i s t h a t the output c h o i c e s of the h ouseholds a r e 80 sensitive to the family endowments. Thus households with s i g n i f i c a n t l y more family labour - the small f u l l - t i m e farms - w i l l produce a higher proportion of supervision sensitive crops in the output mix. Also the value of t o t a l output per hectare i s highest for these farms ( i n s i g n i f i c a n t l y so in SR) . Total output per hectare i s lower.and about equal on large full-time and small part-time farms (except in the SR region). It i s possible, however, that o v e r a l l e f f i c i e n c y i s lower for small part-time farms. In order to draw conclusions about production e f f i c i e n c y , one more set of variables is needed, so the next section discusses the intermediate input pattern. F. INTERMEDIATE INPUTS per HECTARE The intermediate inputs discussed are the eight major intermediate inputs out of thirteen cost c a t e g o r i e s 2 5 . Each cost was deflated using the national price index 2 6 for the category. The variable cost includes the hired human, animal and machine cost and i s deflated with the p r o f i t price i n d e x 2 7 . The intermediate input use pattern, as reported in table 4.3, d i f f e r s mainly between farm types for seed, f e r t i l i z e r , herbicide and i n s e c t i c i d e . Variable cost per hectare, which includes the bought labour, has a tendency to be highest on small f u l l - t i m e farms, lowest on small part-time farms (nonsignificant differences), but the T a b l e 4.3: SELECTED INTERMEDIATE INPUTS per HECTARE (NT$/HA) i n 1980 i n f o u r r e g i o n s f o r SMALL FULL-TIME (SFT), LARGE FULL-TIME (LFT) and SMALL PART-TIME (SPT) FARMS Region North R i c e Mid Rice South R i c e Sugar farm group SFT LFT SPT SFT LFT SPT SFT LPT SPT SFT LFT SPT SEED 9155* 3635" 8166* 4270 2142 3091 8915* 4428" 5426 8761* 5459" 5664 FERT 14013* 8569" 9280 16483 14902" 11241* 16805* 10949" 10448 15744* 1 1606" 1 1877 REQUISITES 5213 4176" 9280 6338 462 1 " 4902 10217 8214" 6760 6980 5 146" 3647 HERBICIDES 1743 1717" 1691 1377 1371 " 1572* 1633 1838" 1543 739* 948" 697* INSECTIC 4997 3758" 2507 10644 1 1785" 6816* 1 1920 12746" 8428* 7408* 5455" 4877 WATER(ha) 2 .09* 1.31" 2 . 35* 2.12 2.13" 2.42 1 . 57 1 . 33" 1 .60 1.71 1.43" 1 . 52 LIVESTOCK 4199 -1233+ -7379* 5134 -4 14 + 1027 17217 24635 18039 449 154 -2673+ FEED(kg) 97 62 -33 + 322 220 159 182 172 185 83 49 -42 + VAR COST 103913 58494" 40832 143133 104941" 103264 144280 132857" 133002 84332 60067" 37183 VC/OUTPUT 33.93 38.27" 4 1 .34 34.34 38.41" 41.91 41.40* 49.01" 54 . 75 35.68 37.95" 38 . 53 SEED 1972 INSECT 1972 LIVEST 1972 7112 4765 3284 6299 1 1902 5444 6863 3202 8720 Source: based on t a b l e s D.9-12 Notes: a: p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e land area b: a l l v a l u e s e x p r e s s e d i n 1980 c o n s t a n t NT$, except f e e d i n kg at 189.48 NT$/kg and the water i n ha at 1898.19 NT$/ha c: H e r b i c i d e s were r e p o r t e d i n the r e q u i s i t e s b e f o r e 1978 d: the v a r i a b l e c o s t s i n c l u d e the c o s t s of h i r e d labour s e r v i c e s (human, an i m a l , machine) r e p o r t e d i n T a b l e 4.1 ": s i g n i f i c a n t l y d i f f e r e n t from z e r o ( s i g n i f i c a n c e l e v e l .05), +: u s u a l l y means t h a t the base v a l u e was c o n s i d e r a b l y l a r g e r i n the e a r l y 1970s than i n 1980 *: s i g n i f i c a n t l y d i f f e r e n t from l a r g e f u l l - t i m e farms 82 proportion of variable costs in output value follows a reverse pattern. The intermediate input conbinations do not change s i g n i f i c a n t l y between farm types. Amalgamation would generally decrease the demand for seed and f e r t i l i z e r , - mostly because of the small full-time farms, while not changing the situation in the other markets. There is no evidence that large f u l l - t i m e farms are faster at using new intermediate inputs such as herbicide and i n s e c t i c i d e s . In the early seventies, the MR small full-time farms were using much more in s e c t i c i d e than other farms; since then, large full-time farms have caught up. The situation in the SUG region i s related to the very fast expansion of vegetable production (and thus seed) and the more rapid decline of hog production (and thus livestock input) on small full-time farms. We can conclude that the intermediate input use i s c l o s e l y related to the output pattern. Both seed and f e r t i l i z e r use are mainly inputs for r i c e and vegetable production, so that these inputs change according to the r e l a t i v e strengths of the vegetable-rice pattern of production between farm types. The water use rises with the paddy land content of the land, being used twice a year on paddy land (so that water use d i f f e r s on large full-time farm in the NR region). Herbicide use does not seem to be a clear substitute for weeding (labour use), except possibly on the MR small part-time farms and on the large SUG region 83 farms. I n s e c t i c i d e use tends t o be l o w e s t on s m a l l p a r t - t i m e farms, p o s s i b l y r e l a t e d t o the lower p r o d u c t i o n of both v e g e t a b l e s and f r u i t s . G. SIMPLE PRODUCTIVITY MEASURES AND INVESTMENT per HA The s i m p l e p r o d u c t i v i t y measures s t u d i e d i n t h i s s e c t i o n a r e e s s e n t i a l l y the commonly used l a n d p r o d u c t i v i t y measures, such as t h e m u l t i p l e c r o p p i n g i n d e x , the c r o p y i e l d s , the output per h e c t a r e and the p r o f i t per h e c t a r e 2 8 . (A d e t a i l e d d e f i n i t i o n of each measure can be found i n appendix A.) Because Bardhan (1973) p o i n t e d out t h a t l a r g e farms might be needed i n a g r i c u l t u r e because they i n v e s t and save more, the i n v e s t m e n t and s a v i n g per h e c t a r e a r e d i s c u s s e d t o o . D i f f e r e n c e s i n l a n d u t i l i z a t i o n can be measured w i t h a m u l t i p l e c r o p p i n g i n d e x i f a l l a v a i l a b l e c r o p s have the same l e n g t h of m a t u r i t y . As r e p o r t e d i n t a b l e 4.4, i n g e n e r a l , s m a l l f u l l - t i m e farms have the h i g h e s t or an e q u a l m u l t i p l e c r o p index t o l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms, however the i n d e x does not i n d i c a t e p r o d u c t i o n i n t e n s i t y on t h e s e farms. I t i s i n s t e a d h i g h l y d e t e r m i n e d by the c r o p m a t u r i t y s c h e d u l e s . The m u l t i p l e c r o p index i n c r e a s e s as v e g e t a b l e p r o d u c t i o n r i s e s but d e c r e a s e s as the p r o d u c t i o n of f r u i t , orange or sugar r i s e s s i n c e these c r o p s occupy the l a n d f o r the y e a r . Thus i n the SR r e g i o n , t h e r e i s a c u m u l a t i v e e f f e c t on the m u l t i p l e c r o p index of s m a l l 84 f u l l - t i m e farms because of s i g n i f i c a n t l y h i g h e r v e g e t a b l e and lower f r u i t p r o d u c t i o n , w h i l e i n the MR r e g i o n , t h e r e i s i n s t e a d a n e u t r a l i z i n g e f f e c t of the h i g h e r f r u i t p r o d u c t i o n . In the NR r e g i o n , t h e r e i s a cummulative e f f e c t on the m u l t i p l e c r o p index of s m a l l farms because of s i g n i f i c a n t l y h i g h e r v e g e t a b l e and lower f r u i t p r o d u c t i o n , w h i l e i n the SUG r e g i o n , t h e r e i s i n s t e a d a n e u t r a l i z i n g e f f e c t of the h i g h e r f r u i t p r o d u c t i o n . We can c o n c l u d e t h a t t h e . m u l t i p l e c r o p index does not i n d i c a t e the degree of l a n d u t i l i z a t i o n by the farm t y p e s , but p r i m a r i l y r e f l e c t s the c r o p m a t u r i t y p a t t e r n i n s t e a d . R i c e y i e l d s a r e c l o s e l y s t u d i e d i n Taiwan because r i c e i s the main s t a p l e food and the main t a r g e t of the n a t i o n a l f o o d s e l f - s u f f i c i e n c y p o l i c y . R e f e r r i n g t o t a b l e 4.4, i n g e n e r a l r i c e y i e l d s do not d i f f e r s i g n i f i c a n t l y between farm t y p e s , except i n the MR second r i c e y i e l d s . In t h i s MR c a s e , l a r g e f u l l - t i m e farms' second r i c e y i e l d s have shot ahead of s m a l l farm y i e l d s i n the second h a l f of the s e v e n t i e s s i n c e the break c o e f f i c i e n t i s s i g n i f i c a n t . But o v e r a l l r i c e y i e l d s a r e not s i g n i f i c a n t l y i n f l u e n c e d by the farm t y p e . Thus, the advantage t h a t Sen and o t h e r i n v e s t i g a t o r s found f o r the s m a l l farms does not o b t a i n i n Taiwanese r i c e p r o d u c t i o n . However, t h e r e i s a l s o no e v i d e n c e of a d i s a d v a n t a g e on s m a l l and p a r t - t i m e farms f o r t h i s m e c h a n i z a b l e c r o p . T h i s i s p r o b a b l y the consequence of a r i c e t e c h n o l o g y which i s n e u t r a l t o s c a l e 2 9 T a b l e 4.4: SIMPLE PRODUCTIVITY MEASURES and INVESTMENT per HA i n 1980 i n f o u r r e g i o n s f o r SMALL FULL-TIME (SFT), LARGE FULL-TIME (LFT) and SMALL PART-TIME (SPT) FARMS Region North R i c e I Mid R i c e 1 South R i c e Sugar Farm group SFT LFT SPT | SFT LFT SPT | SFT LFT SPT SFT LFT SPT ,MULT CROP 227* 178" 198* 198 195" 206 244* 217" 204 179 170" 153 RICE YI ELD 1 4427 4202" 4373 5756 6233" 5851* 6006 5538" 5882 6186 6469" 6310 RICE YIELD2 3519 324 1 " 3666 4943* 5461 " 4951 4027 4179" 3991 4751 4937" 4961 OTH YIELD 171429* 99654" 157808* 167282 150795" 102575 844 16 84250" 66329 96315* 74561" 103622* OUTPUT/HA 255874* 184372" 170814 375749* 271765" 241289 295176 237641" 227826 240165* 165290" 134475 PROFIT/HA 251960* 125878" 129980 232616* 166824" 138028 150896 104784" 94824 155834* 105224" 97298 F INV/HA 38453 23738 32024 51822 40696 35677 34034 26967 25991 2391 1 3614 1" 18047" SAV/HA 99893* 42357" 134547* 129309 82023" 198745* 71832 52033" 179766* 32761 27485" 66640" RICE Y2 1972 OTH Y 1972 63551 34974 " 49930 5015 80491 5100" 39715" 5023 15784 43493* 19120" 25405 35198 24521 " 42505" Source: based on t a b l e s D.13-16 Notes: a: m u l t i p l e c r o p index: cropped area per c u l t i v a t a b l e area b: r i c e y i e l d s : f i r s t or second season r i c e h a r v e s t per area p l a n t e d to r i c e (kg) c: o t h e r y i e l d : n o n - r i c e c r o p v a l u e per area p l a n t e d to n o n - r i c e c r o p s ( u n d e f l a t e d v a l u e ) ( d o e s not i n c l u d e mushroom) d: o u t p u t / h a : output value per e q u i v a l e n t c u l t i v a t a b l e h e c t a r e ( d e f l a t e d w i t h a p r o f i t d e f l a t o r ) e: p r o f 1 t / h a : p r o f i t v a l u e per e q u i v a l e n t c u l t i v a t a b l e h e c t a r e ( d e f l a t e d w i t h a p r o f i t d e f l a t o r ) f : i n v e s t m e n t / h e c t a r e : investment 1n f a r m i n g per e q u i v a l e n t c u l t i v a t a b l e h e c t a r e ( d e f l a t e d w ith the consumer p r i c e index) g: s a v i n g / h e c t a r e : f a m i l y s a v i n g s per e q u i v a l e n t c u l t i v a t a b l e h e c t a r e ( d e f l a t e d w i t h the consumer p r i c e index) ": s i g n i f i c a n t l y d i f f e r e n t from z e r o ( s i g n i f i c a n c e l e v e l .05) *: s i g n i f i c a n t l y d i f f e r e n t formm l a r g e f u l l - t i m e farms 86 and t o s u p e r v i s i o n 3 0 , and a l s o because v e r y good machine s e r v i c e markets e x i s t 3 1 . The n o n - r i c e c r o p v a l u e y i e l d i s the t o t a l income from n o n - r i c e c r o p s per n o n - r i c e cropped area ( s u g a r , the most c h a r a c t e r i s t i c c r o p of the Sugar r e g i o n i s p a r t of t h i s y i e l d measure). The n o n - r i c e y i e l d i s h i g h e s t on s m a l l f u l l - t i m e farms w h i l e i n the NR and SUG r e g i o n s the l a r g e f u l l - t i m e farm y i e l d i s low e s t and i n the MR and SR r e g i o n s the s m a l l p a r t - t i m e farm y i e l d i s l o w e s t . Break c o e f f i c i e n t s are such t h a t the r e l a t i v e p o s i t i o n s of the farm t y p e s were the same i n the e a r l y y e a r s as they are i n the r e c e n t y e a r s . However, the y i e l d d i f f e r e n c e s were much l a r g e r between the farm t y p e s i n 1972 i n the MR and SR r e g i o n s w i t h .small f u l l - t i m e farm y i e l d s n e a r l y double the l a r g e f u l l - t i m e farm y i e l d s , but t h i s advantage has f a l l e n d r a m a t i c a l l y . On the o t h e r hand, i n the NR and SUG r e g i o n s , the y i e l d d i f f e r e n c e s have grown l a r g e r i n 1980 because f o r a l l farm t y p e s y i e l d s n e a r l y t r i p l e d s i n c e 1972. The y i e l d p a t t e r n s of the r i c e and n o n - r i c e c r o p s suggests t h a t n o n - r i c e c r o p s r e c e i v e the d i f f e r e n t i a l f a m i l y l a b o u r amounts between farm t y p e s . The output per h e c t a r e and the p r o f i t per h e c t a r e measures of l a n d p r o d u c t i v i t y show the same p a t t e r n , w i t h s m a l l f u l l - t i m e farms p r o d u c i n g s i g n i f i c a n t l y more per h e c t a r e ( i n s i g n i f i c a n t l y so i n the SR r e g i o n ) than l a r g e f u l l - t i m e farms which, i n t u r n , produce s l i g h t l y more than 87 small part-time farms. Break c o e f f i c i e n t s are i n s i g n i f i c a n t so t h i s pattern has been stable over the sample period. The pattern of output per hectare and p r o f i t per hectare matches the pattern of the family labour per hectare. Thus per hectare, the s i g n i f i c a n t l y higher c u l t i v a t i o n intensity on small full-time farms produces s i g n i f i c a n t l y more output and s i g n i f i c a n t l y more returns to the family than on large fu l l - t i m e farms (with the exception of the SR region farms). However, the s l i g h t l y higher intensity of c u l t i v a t i o n on small part-time farms does not produce higher output and returns than on large full-time farms, and may indicate a problem with t o t a l factor productivity. Turning to the investment behaviour, in the r i c e regions, small full-time farms invest more per hectare (but i n s i g n i f i c a n t l y ) than large f u l l - t i m e farms and large fu l l - t i m e and small part-time farms have similar investment amounts. In the SUG region large f u l l - t i m e farms invest more than small. full-time farms and s i g n i f i c a n t l y more than small part-time farms, which i s related to the reduction of livestock a c t i v i t y on small farms. There i s thus generally no large variation in annual farm investment per hectare. On the other hand, saving per heqtare varies considerably, with small part-time farms saving s i g n i f i c a n t l y more than small f u l l - t i m e farms and these saving more than large full-time farms. These savings per hectare variations are of course p a r t i a l l y a r e f l e c t i o n of 88 the f a c t t h a t household incomes per h e c t a r e on s m a l l f u l l - t i m e farms are l a r g e r than on l a r g e f u l l - t i m e farms and t h a t s m a l l p a r t - t i m e farms have income s o u r c e s which do not r e l a t e t o t h e i r farm s i z e . Thus the a l l o c a t i o n of s a v i n g s per h e c t a r e t o farm investment i s n o t i c a b l y h i g h e r ( h a l f of the s a v i n g s ) on l a r g e f u l l - t i m e farms and s m a l l f u l l - t i m e farms than on s m a l l p a r t - t i m e farms ( o n l y one q u a r t e r ) , i n d i c a t i n g the r e l a t i v e importance t h a t the farm h o u s e h o l d s g i v e t o the far m i n g a c t i v i t y i n t h e i r dynamic h o u s e h o l d d e c i s i o n s . For the f a r m i n g a c t i v i t y i t s e l f however, t h e r e a r e no l a r g e dynamic consequences r e s u l t i n g from the farm t y p e s because investment l e v e l s a re not v e r y d i f f e r e n t per h e c t a r e . T h i s c o n c l u s i o n i s c o n f i r m e d by.the f a c t t h a t the amounts of farm a s s e t a v a i l a b l e per h e c t a r e a l s o do not show much i n f l u e n c e from the farm t y p e s . H. CONCLUSION There i s no e v i d e n c e t h a t l a r g e f u l l - t i m e farms are more ' p r o d u c t i v e ' than s m a l l farms, as n o n - r i c e y i e l d s , output per h e c t a r e and p r o f i t per h e c t a r e g e n e r a l l y a r e h i g h e s t on s m a l l f u l l - t i m e farms. Large f u l l - t i m e farms are i n the m i d d l e but not s i g n i f i c a n t l y d i f f e r e n t from the s m a l l - p a r t time farms. R i c e y i e l d s a r e s i m i l a r on a l l farm t y p e s , so t h a t s m a l l and p a r t - t i m e f a r m i n g does not l e a d t o y i e l d l o s s e s f o r t h i s m e c h a n i z a b l e c r o p . 89 That l a r g e f u l l - t i m e farms are needed because they respond f a s t e r t o new t r e n d s i n a g r i c u l t u r a l consumption or t o new t e c h n o l o g i e s i s not c o n f i r m e d by the data f o r the 1970s. G e n e r a l l y t h e r e were no d i f f e r e n t i a l time e f f e c t s (break c o e f f i c i e n t s were i n s i g n i f i c a n t ) , n e i t h e r f o r v e g e t a b l e or f r u i t p r o d u c t i o n , nor f o r the machine, h e r b i c i d e or i n s e c t i c i d e use. Thus s m a l l and l a r g e farms s h a r e d the same annual q u a n t i t y i n c r e a s e (or d e c r e a s e ) throughout the 1970s. In a dynamic c o n t e x t , farm i n v e s t m e n t s per h e c t a r e ar e not s i g n i f i c a n t l y d i f f e r e n t between farm t y p e s i n the r i c e r e g i o n s . In the SUG r e g i o n , s m a l l farms show s i g n i f i c a n t l y l e s s investment than l a r g e f u l l - t i m e farms which r e l a t e s t o t h e i r s u b s t a n t i a l r e d u c t i o n of l i v e s t o c k p r o d u c t i o n . The comparison of s a v i n g s per h e c t a r e and farm investment per h e c t a r e does show t h a t the importance of the farm as an investment a r e a i s h i g h e s t on l a r g e f u l l - t i m e and l o w e s t on s m a l l p a r t - t i m e farms. But the farm a c t i v i t y i t s e l f does not s u f f e r because t h e farm investment l e v e l s per h e c t a r e a r e not d i f f e r e n t a c r o s s farm t y p e s . T h i s c o n c l u s i o n i s a l s o comfirmed by the f a c t t h a t farm a s s e t l e v e l s per h e c t a r e are s i m i l a r on a l l farm t y p e s . The e f f e c t of the p o l i c y p r o p o s a l t o amalgamate s m a l l farms i n t o l a r g e farms, where one h o u s e h o l d would farm f u l l - t i m e , would immediately have s e r i o u s consequences i n s e v e r a l a g r i c u l t u r a l markets. E s p e c i a l l y because of the 90 amalgamation of f u l l - t i m e s m a l l farms, t h e r e would be a l a r g e amount of d i s p o s s e s s e d f a m i l y l a b o u r . T h i s l a b o u r would not be h i r e d by the newly formed l a r g e farms s i n c e they a l r e a d y use even l e s s h i r e d l a b o u r than do s m a l l farms. The s u r p r i s i n g u n r e s p o n s i v e n e s s of the h i r e d human l a b o u r i n p u t s t o the e x t r e m e l y f a s t wage i n c r e a s e between 1972 and 1980, g i v e s l i t t l e hope t h a t h i r i n g of l a r g e farms would e v e n t u a l l y repond s u f f i c i e n t l y t o wage d e c r e a s e s . I n s t e a d , a g r i c u l t u r a l employment would f a l l d r a m a t i c a l l y (by a minimum of 250 days per h e c t a r e amalgamated). The v e g e t a b l e market would e x p e r i e n c e a d r a m a t i c r e d u c t i o n i n s u p p l y (a minimum r e d u c t i o n of 6800 kg per h e c t a r e ) , w h i l e t h e r i c e market a l a r g e i n c r e a s e i n s u p p l y . G e n e r a l l y , t o t a l p r o d u c t i o n would f a l l and w i t h i t the i n t e r m e d i a t e i n p u t demand. Because of the amalgamation of s m a l l p a r t - t i m e farms, the machine and a n i m a l s e r v i c e market would e x p e r i e n c e a f a l l i n demand and l e s s machines would be used on the l a n d . O v e r a l l , the e v i d e n c e of the p r o d u c t i o n d a t a s u g g e s t s t h a t farm households behave r a t i o n a l l y , but do so by a d j u s t i n g t h e i r output p a t t e r n t o t h e i r f i x e d endowment of f a m i l y l a b o u r and l a n d i n s t e a d of a d j u s t i n g h i r e d s e r v i c e s . Adjustment t o the f a m i l y l a b o u r per l a n d r a t i o s does not g e n e r a l l y take p l a c e t h r o u g h a r e p l a c e m e n t of f a m i l y l a b o u r by machine s e r v i c e s or h i r e d l a b o u r . I n s t e a d c u l t i v a t i o n i s i n t e n s i f i e d on the s m a l l f u l l - t i m e farm 91 (whose f a m i l y l a b o u r per l a n d r a t i o i s h i g h e s t of the farm t y p e s ) , so t h a t output per h e c t a r e i s s i g n i f i c a n t l y h i g h e r than on the o t h e r farms. A d d i t i o n a l l y , the farms a d j u s t the c r o p c o m b i n a t i o n s t o the f a m i l y l a b o u r p r o p o r t i o n i n the t o t a l l a b o u r use, so t h a t the p r o p o r t i o n of s u p e r v i s i o n - s e n s i t i v e c r o p s i n t o t a l o u t p u t i s h i g h e s t on s m a l l f u l l - t i m e farms. Crop c o m b i n a t i o n s a l s o responded to the l a n d q u a l i t y endowments. The d a t a a l s o s u g g e s t s t h a t t h i s s t r a t e g y of a d j u s t i n g p r o d u c t i o n t o the f a m i l y endowments may be e q u a l l y s u c c e s s f u l i n e f f i c i e n c y terms on s m a l l f u l l - t i m e farms as on l a r g e f u l l - t i m e farms i n the NR, MR and SUG r e g i o n s but t h a t t h e r e may be problems i n the SR r e g i o n and on the s m a l l p a r t - t i m e farms. Compared w i t h l a r g e f u l l - t i m e farms, the f a m i l y l a b o u r - l a n d r a t i o s a r e s i g n i f i c a n t l y h i g h e r on s m a l l f u l l - t i m e (at l e a s t 250 days per h e c t a r e h i g h e r ) and output v a l u e s per h e c t a r e a re c o r r e s p o n d i n g l y s i g n i f i c a n t l y h i g h e r (minimum 74875 NT$ more per h e c t a r e ) w h i l e v a r i a b l e c o s t s a r e a s l i g h t l y lower p r o p o r t i o n of o u t p u t (at 3 7 % ) . (The o n l y e x c e p t i o n i s the SR r e g i o n where the output v a l u e i s not s i g n i f i c a n t l y h i g h e r . ) Compared w i t h l a r g e f u l l - t i m e f arms, the l a b o u r - l a n d r a t i o s a re h i g h e r , but not s i g n i f i c a n t l y so, on s m a l l p a r t - t i m e farms and output v a l u e s per h e c t a r e a r e s l i g h t l y lower w h i l e v a r i a b l e c o s t p r o p o r t i o n s a r e s l i g h t l y h i g h e r . T h i s p a t t e r n may i n d i c a t e i n e f f i c i e n c y on s m a l l p a r t - t i m e farms r e l a t i v e t o l a r g e f u l l - t i m e farms. 92 In order to further test the question of the t o t a l production e f f i c i e n c y of the d i f f e r e n t farm types under this situation of very d i s s i m i l a r family input r a t i o s , t o t a l factor productivity w i l l be investigated. This is the subject of the next chapter. 9 3 I. NOTES 1 The issue of technical change over the d i f f e r e n t farm types in Taiwan i s not as great an issue as in most developing countries, because i t is not a question of such a major change as the green revolution. The green revolution, and the question of i t s adoption were issues of the 1930s and 1950s in Taiwan. There is no mention in the Taiwan l i t e r a t u r e , where concern i s expressed about small or part-time farming, about adoption rates of bio-technical innovations -(Wu, Yu (1980); Chen 1980)). If anything there is some concern that new v a r i e t i e s in Taiwan do not get a s u f f i c i e n t testing period any more because farmers take up the new v a r i e t i e s and methods too fast (CAPD, talks with the technical research d i v i s i o n members). 2 Adaptation of the Hecksher-Ohlin theorem which says that a country (farm), has a comparative advantage in those goods (crops) whose thechology i s most intensive in the r e l a t i v e abundant factor of the country (farm) and so exports t h i s good (produces and s e l l s i t to the a g r i c u l t u r a l market) (Woodland (1982), Ohlin (1933)). 3 The data used is the average value, taken over the farmers in a size group. This average value i s then compared with the farm s i z e . 4 In the Latin American context Cline (1970) had already estimated Cobb-Douglas production functions for B r a z i l , finding constant returns to scale. 5 For these measures: gross income, value added, per ha cult i v a t e d , or c u l t i v a t a b l e . 6 The extremely large number of comparisons could be avoided by l i m i t i n g the comparisons to the small f u l l - t i m e , the small part-time and the large full-time farms. However, the information on the medium farms and those which are not so extreme in their p a r t i c i p a t i o n l e v e l also gives additional insight. Spurious differences between small and large farms can be i d e n t i f i e d i f medium farm values are not somewhere between them. Si m i l a r l y , PT2 and PT1 farm values should be in between the values of the full-time and the low participant farms reported in the text. 94 7 Too many i n t e r a c t i o n terms of the type d s d p would make the c o r r e l a t i o n m a t r i x of the independent v a r i a b l e s s i n g u l a r and so make^ the r e g r e s s i o n e s t i m a t i o n i m p o s s i b l e . 8 We choose the p e r i o d 1972 - 7 6 v e r s u s the p e r i o d 1977-80 because the growth r a t e of the a g r i c u l t u r a l p r o d u c t i o n was s i g n i f i c a n t l y h i g h e r i n the p e r i o d 1972-76 than i n the f o u r y e a r s b e f o r e i t and a f t e r i t . The a v a i l a b i l i t y and a d o p t i o n of the new mechanized methods was the reason f o r t h i s h i g h e r growth r a t e which l a t e r s l a c k e d o f f . I t i s t h u s i n t e r e s t i n g t o i n v e s t i g a t e i f s m a l l (and medium) farms showed a s i g n i f i c a n t l y d i f f e r e n t growth path than the average l a r g e farm growth p a t h . For e c o n o m e t r i c r e a s o n s we can o n l y t e s t the d i f f e r e n c e f o r the f i r s t 5 y e a r s of the sample. An example can show the e f f e c t of the break term. E.g., i t i s of i n t e r e s t t o measure whether the s m a l l farms l a g g e d s i g n i f i c a n t l y b ehind the l a r g e farms i n the a d o p t i o n of machinery. There are two p o s s i b i l i t i e s . 1) S i n c e machine use became a t t r a c t i v e from 1968 on ( e s p e c i a l l y i n r i c e p r o d u c t i o n ) , by 1972 l a r g e farms may a l r e a d y have adopted them f a s t e r than s m a l l farms. T h i s would be i n d i c a t e d i n the r e g r e s s i o n f o r t h e machine s t o c k (see t a b l e D.1-4 where a = A ) by A S B + A S<0. C a t c h i n g up i n the e a r l y 1970s by the s m a l l farms would then be i n d i c a t e d by ASB<0 ( g i v e n the g e n e r a l upward t r e n d f o r l a r g e farms of A 7 2 < A 7 3 <..<0). A l t e r n a t i v e l y , a f u r t h e r s p e e d i n g ahead by the l a r g e farms would be i n d i c a t e d by A S B>0. An i n s i g n i f i c a n t break c o e f f i c i e n t (ASB=0) would mean t h a t s m a l l and l a r g e farms share the same a n n u a l a d o p t i o n volume i n the 1970s. 2) I f however no machines were y e t a v a i l a b l e b e f o r e 1972, so t h a t l a r g e and s m a l l farms s t a r t e d o f f e q u a l l y i n 1972 ( A S + A S B = 0 ) , then e a r l i e r a d o p t i o n by l a r g e farms would be i n d i c a t e d by ASB>0 ( i n a s i t u a t i o n of growth or A 7 2 < A 7 3 < . . < 0 ) . 9 Farm i n v e n t o r y was i n c l u d e d because g e n e r a l l y t h i s v a l u e i s an a p p r o x i m a t i o n f o r the average amount of p r o d u c t s t h a t t h e farmer has c o n t i n u o u s l y around on the farm ( f e r t i l i z e r , h e r b i c i d e s a r e bought t h r e e t i m e s a year and s t o c k e d u n t i l used, some p r o d u c t s are a l s o s t o r e d f o r a w h i l e ) . 10 An i n d e x f o r the farm a s s e t s t o c k was c o n s t r u c t e d . The inde x i s a F i s h e r I d e a l i n d e x , based on sample s h a r e s of the farm a s s e t s i n the t o t a l farm a s s e t s t o c k v a l u e , and u s i n g n a t i o n a l p r i c e i n d i c e s . The farms a s s e t s a r e : l i v e s t o c k , t o o l s , machines, t r e e s , and farm inventory.. The f r u i t p r i c e index was used as a r e a s o n a b l e a p p r o x i m a t i o n f o r the v a l u e changes t h r o u g h the y e a r s of t r e e s and f o r each of the o t h e r a s s e t s t h e r e was a n a t i o n a l p r i c e index ( D G B A S ) (see appendix A ) . 95 11 The amounts of h i r e d human days r e p o r t e d c o r r e s p o n d s c l o s e l y t o the amount t h a t can be c a l c u l a t e d from the human l a b o u r c o s t u s i n g the a g r i c u l t u r a l wage r a t e . T h i s s u g g e s t s t h a t h i r e d l a b o u r i s indeed u s u a l l y h i r e d a t the a g r i c u l t u r a l wage r a t e s as r e p o r t e d i n the p r i c e s t a t i s t i c s (DGBAS, P r i c e s p a i d and r e c i e v e d by f a r m e r s ) . a t a c o n v e r s i o n r a t e of .8 (10 hours i n p u t ) . The male wages Female l a b o u r was counted hours worked counted as 8 f o r the p e r i o d were: 1972 78 1975 1973 101 1976 1974 171 1977 195 1 93 213 1 978 1979 1 980 254 289 383 NT$ per day 12 DGBAS, P r i c e s p a i d and r e c i e v e d by farmers from 1976 on, e a r l i e r s e r v i c e p r i c e s were c a l c u l a t e d from p r i c e s r e p o r t e d i n JCRR (annual r e p o r t s ) i n some of the a r t i c l e s on c o s t s i t u a t i o n s of the farmers (thus on the bases of s u r v e y s ) , but not a l l y e a r s were a v a i l a b l e . Where a year was l a c k i n g , an average was c a l c u l a t e d between the a v a i l a b l e o b s e r v a t i o n s , p r i c e s used a r e : 1972 1150 1975 1973 1510 1976 1974 1870 1977 The r e s u l t a n t machine s e r v i c e 2230 2590 2627 1 978 1979 1 980 3293 3527 4592 NT$ per ha, 13 See p r e v i o u s n o t e , the a n i m a l s e r v i c e p r i c e s used are: 1 972 1 973 1 974 88 1 07 1 75 1 975 1 976 1 977 198 1 96 206 1 978 1 979 1980 202 274 346 NT$ per day 14 DGBAS, P r i c e s p a i d and r e c i e v e d by f a r m e r s , i n d i c e s , 15 The r e l a t i v e c o s t changes can be c a p t u r e d by comparing the index of each c o s t c a t e g o r y . For the 1972-80 p e r i o d , they are y e a r male i n t e r e s t machine a n i m a l t o o l p r o f i t wage c o s t s e r v i c e s e r v i c e e q u i p 1 972 20 90 25 25 52 39 1 973 26 93 33 31 57 51 1974 45 1 05 41 51 82 70 1 975 51 101 49 57 89 84 1 976 51 97 56 57 82 76 1 977 56 93 57 60 82 71 1978 66 92 72 58 83 78 1979 78 95 77 79 89 89 1980 100 1 00 100 100 100 100 16 From the method of a n a l y s i s and farm c l a s s i f i c a t i o n i n t h i s s t u d y , one cannot i n v e s t i g a t e whether farms became s m a l l e r or changed t h e i r l e v e l of p a r t i c i p a t i o n i n 96 response t o the changing economic c i r c u m s t a n c e s , through t i m e . As d i s c u s s e d i n c h a p t e r I I I , the sample s e l e c t i o n method i t s e l f a l s o p r e v e n t s t h i s i n v e s t i g a t i o n . 17 See p r e v i o u s n o t e . The c h o i c e of p a r t i c i p a t i o n l e v e l i s . a c h o i c e which can not be a n a l y s e d i n t h i s s t u d y . As d i s c u s s e d i n c h a p t e r I I , the phenomenon of p a r t - t i m e farming depends s t r o n g l y on the farm f a m i l y l a b o u r c h a r a c t e r i s t i c s , and t h i s i n f o r m a t i o n i s not a v a i l a b l e . 18 F a m i l y l a b o u r endowment on the farms i s not p r o p o r t i o n a l t o the l a n d s i z e , so t h a t s m a l l farms a u t o m a t i c a l l y have more f a m i l y l a b o u r endowment per h e c t a r e . In the MR and SR r e g i o n s , the endowments ar e s i m i l a r on. a l l farms (6 e q u i v a l e n t w o r k e r s ) . In the NR and. SUG r e g i o n s s m a l l farms have 1.5 e q u i v a l e n t workers l e s s than l a r g e farms, the l a t t e r h a v i n g 8 workers. 19 An index of net p r o f i t was c o n s t r u c t e d and used on the t o t a l output v a l u e , the t o t a l v a r i a b l e c o s t and on the p r o f i t , so t h a t p r o f i t can be c a l c u l a t e d from the o t h e r two. The index f o r the net p r o f i t , or net r e t u r n s t o the index i s a F i s h e r I d e a l Index and i s based on the p r o f i t shares of o u t p u t s and v a r i a b l e i n p u t s c a l c u l a t e d from the t o t a l sample (2274 o b s e r v a t i o n s : around 250 o b s e r v a t i o n s per y e a r ) , and the p r i c e s of these commodity groups (DGBAS, p r i c e p a i d and r e c e i v e d by the f a r m e r s ) . (See appendix A.) We used t h i s p r o f i t index on b oth output and v a r i a b l e c o s t so t h a t output minus v a r i a b l e c o s t would be the p r o f i t as r e p o r t e d i n t a b l e 4.4. 20 The n a t i o n a l p r i c e index i n f o r m a t i o n d i d not f u l l y c o r r e s p o n d w i t h the c a t e g o r i e s of t h i s survey so t h a t i n d i c e s f o r s e v e r a l commodity groups had t o be c o n s t r u c t e d . I f the n a t i o n a l p r i c e d a t a d i d c o r r e s p o n d t o the sample c a t e g o r y then the n a t i o n a l p r i c e index was used. The p r i c e i n d i c e s were c a l c u l a t e d from n a t i o n a l commodity p r i c e i n f o r m a t i o n (DGBAS) and the shares of the commodities i n the n a t i o n a l a g r i c u l t u r a l p r o d u c t i o n (PDAF) of the subgroup, u s i n g the F i s h e r I d e a l p r i c e i n d e x . P r i c e i n d i c e s were c a l c u l a t e d f o r : - c e r e a l s : sorghum, c o r n , K a o h l i a n g , wheat - s p e c i a l c r o p s : t e a , peanut, sesame, ca s s a v a - f r u i t : a l l f r u i t s except the c i t r u s f r u i t s (26 t y p e s ) - orange: a l l c i t r u s f r u i t s (5 t y p e s ) - v e g e t a b l e s : a l l v e g e t a b l e s (38 t y p e s ) - beans: a l l bean ty p e s (5 t y p e s ) - p o u l t r y : c h i c k e n , duck, t u r k e y and o t h e r . (See a l s o appendex A.) 97 21 T h i s i s not a r i c e y i e l d measure. I n s t e a d i t i n d i c a t e s how f r e q u e n t l y r i c e i s chosen as a c r o p by the farm groups. The r i c e y i e l d measure i s r e p o r t e d i n t a b l e 4.4. 22 The i n f o r m a t i o n i n t h i s study g i v e s an i n d i c a t i o n of the s u p p l y f u n c t i o n s h i f t . Longer term adjustments because of changes i n the r e l a t i v e p r o d u c t p r i c e s cannot be i n v e s t i g a t e d w i t h i n the scope of t h i s s tudy. Knowledge of the market demand s t r u c t u r e would be r e q u i r e d . However i t i s l i k e l y t h a t the r e l a t i v e p r i c e would r i s e of those c r o p s where the s u p p l y c u r v e would s h i f t i n ( v e g e t a b l e , an i n c r e a s i n g l y d e s i r e d food i n T a iwan). 23 The r i c e e f f e c t s i n the NR r e g i o n are r e l a t e d t o the l a n d q u a l i t y . A c o n s o l i d a t i o n of s m a l l farms would produce l a r g e f u l l - t i m e farms w i t h s i g n i f i c a n t l y h i g h e r p r o p o r t i o n s of paddy l a n d than the p r e s e n t l a r g e farms. R i c e p r o d u c t i o n e f f e c t s would p r o b a b l y be the same as what can be observed i n the MR r e g i o n , where l a n d q u a l i t i e s a r e s i m i l a r on the l a r g e farms as on the s m a l l farms, and as on the s m a l l NR farms. Thus t h e r e would a l s o be an i n c r e a s e i n r i c e p r o d u c t i o n from the amalgamation. 24 The same p a t t e r n of o utput a d j u s t m e n t s t o l a n d q u a l i t y d i f f e r e n t i a l s can be o b s e r v e d between the MR and SR r e g i o n . The farms i n the SR r e g i o n have more d r y l a n d than those i n the MR r e g i o n , and t h e r e i s more p r o d u c t i o n of dry l a n d c r o p s i n the SR r e g i o n i n consequence. 25 Throughout t h i s s t u d y , farm c o s t s do not i n c l u d e farm t a x e s , farm i n t e r e s t payments and l a n d r e n t a l payments. These c o s t s are r e l a t e d t o the r e p o r t e d f a m i l y endowments and not t o the use of i n t e r m e d i a t e i n p u t s . The i n f o r m a t i o n on the f a m i l y endowments i s i n s u f f i c i e n t t o r e l a t e the t a x and l a n d r e n t c o s t t o the owned and r e n t e d l a n d , or the i n t e r e s t c o s t t o the farm a s s e t s . 26 DGBAS, p r i c e p a i d and r e c e i v e d by f a r m e r s , i n d i c e s 27 see note 17. 28 S i n c e t h e s e l a n d p r o d u c t i o n measures are f a i r l y easy t o c a l c u l a t e , they t e n d t o be used almost e x c l u s i v e l y i n the Taiwan a g r i c u l t u r a l l i t e r a t u r e . 29 R i c e f i e l d s cannot a r e e x t r e m e l y l a r g e because they have t o be l e v e l . Thus economies of s c a l e w i t h r e s p e c t t o f i e l d s i z e do not e x i s t . 98 30 The machine t e c h n o l o g y imposes i t s own q u a l i t y s t a n d a r d on the a c t i v i t y . A l s o the r i c e t e c h n o l o g y has become v e r y s t r e a m l i n e d and s t a n d a r d i z e d w i t h r e s p e c t t o f e r t i l i z e r a p p l i c a t i o n s , h e r b i c i d e use e t c . , t h e r e b y d i m i n i s h i n g the g a i n s from f a m i l y s u p e r v i s i o n . 31 The e x i s t e n c e of the machine s e r v i c e markets means t h a t the machine s e r v i c e s become d i v i s i b l e , t h e r e b y d i m i n i s h i n g the economies of s c a l e a s s o c i a t e d w i t h i n d i v i s i b i l i t i e s . A l s o the growing market f o r human l a b o u r which s p e c i a l i z e s i t s a c t i v i t i e s d i m i n i s h e s the g a i n from f a m i l y s u p e r v i s i o n . (There are a l r e a d y markets f o r males who o n l y do the f e r t i l i z i n g a c t i v i t y , the i n s e c t i c i d e s p r a y i n g , p r u n i n g , e t c . ) . 99 CHAPTER V TOTAL FACTOR PRODUCTIVITY A. INTRODUCTION Three question are addressed in this chapter by estimating value-added production functions of the family supplied production factors. Is there evidence of increasing returns to scale? Are part-time farmers technically less e f f i c i e n t than full-time farmers? Can a re d i s t r i b u t i o n of land improve the a l l o c a t i v e e f f i c i e n c y of the a g r i c u l t u r a l sector by improving the deployment of land and labour? The l a t t e r question is investigated in terms of adjustments of land sizes to households (rather than the reverse) because a change in the land l e g i s l a t i o n i s an instrument that the government can use. The labour market i s already free of l e g i s l a t i v e constraints and i t may be very hard to find , and undesirable to use, policy instruments or l e g i s l a t i o n to make households adjust their labour a l l o c a t i o n to the farm l a n d 1 . To investigate the above questions a special value-added model i s developed, where net farm income is assumed to be a function of the family supplied factors: land (paddy, dry), labour (male, female) and farm asset stock. As shown in the previous chapter, the factor 1 00 a p p l i c a t i o n on the l a n d ( e s p e c i a l l y the f a m i l y l a b o u r a p p l i c a t i o n ) i s ve r y d i f f e r e n t a c r o s s farm t y p e s , so t h a t s i n g l e (average) l a n d p r o d u c t i v i t i e s measure o n l y a p p r o x i m a t e l y the s o c i a l e f f i c i e n c y l e v e l of each farm t y p e . Thus a s p e c i a l form of the t o t a l f a c t o r p r o d u c t i v i t y approach i s attempted i n t h i s c h a p t e r by c o n c e n t r a t i n g on the f a m i l y s u p p l i e d i n p u t s and the net r e t u r n they produce. T h i s approach i s n e c e s s a r y because of da t a l i m i t a t i o n s , but i s s u f f i c i e n t , g i v e n t h a t the main i n t e r e s t of the a g r i c u l t u r a l a u t h o r i t i e s i s i n the e f f i c i e n t use of the l a n d r e s o u r c e of the a g r i c u l t u r a l s e c t o r , as h e l d now by ho u s e h o l d s , and i n the e f f i c i e n t use of the farm a s s e t s as owned. A l s o , a l t h o u g h not r e c o g n i z e d by the a u t h o r i t i e s , e f f i c i e n t use of the economy's r e s o u r c e s means t h a t t h e r e s h o u l d be f u l l use of immobile farm f a m i l y l a b o u r . That i s , f a r m i n g s h o u l d not use f a m i l y members who c o u l d work somewhere e l s e , when t h e r e i s unemployment on some farms of f a m i l y members who c o u l d not work except i n the s e l f - e m p l o y e d farm s i t u a t i o n . The l i t e r a t u r e o v e rview i n s e c t i o n B shows the development of methods f o r t o t a l f a c t o r p r o d u c t i v i t y comparisons between farms of v a r i o u s s i z e s i n the .Asian d e v e l o p i n g c o u n t r i e s . In s e c t i o n C, the t h r e e forms of p r o d u c t i o n i n e f f i c i e n c y a r e d e f i n e d and r e l a t e d t o the s i z e and p a r t i c i p a t i o n c h a r a c t e r i s t i c s of the farmers i n Taiwan. T h i s s t u d y ' s value-added p r o d u c t i o n f u n c t i o n approach i s 101 e x p l a i n e d i n s e c t i o n D and t h r e e f u n c t i o n s (the l i n e a r f u n c t i o n , a l i n e a r f u n c t i o n w i t h s l o p e dummy v a r i a b l e s and the G e n e r a l i z e d L i n e a r f u n c t i o n ) a r e proposed f o r e s t i m a t i o n i n s e c t i o n E. The s t a t i s t i c a l a s s u m p t i o n s and the d a t a f o r the e s t i m a t i o n s ' a r e d e s c r i b e d i n s e c t i o n F-G. The e m p i r i c a l r e s u l t s a re p r e s e n t e d i n s e c t i o n H and the c o n c l u s i o n s i n s e c t i o n I . For c l a r i t y of p r e s e n t a t i o n , most t a b l e s of the e s t i m a t i o n r e s u l t s a r e c o l l e c t e d i n appendix E. B. LITERATURE As i n d i c a t e d i n the p r e v i o u s c h a p t e r , c o n c e r n f o r the e f f i c i e n c y of p r o d u c t i o n i n t h e farms of v a r i o u s s i z e s o r i g i n a l l y tended t o be c o n c e n t r a t e d on the e f f i c i e n c y of l a n d use. However, Sen's (1962) o b s e r v a t i o n s I and I I went beyond the l a n d p r o d u c t i v i t y q u e s t i o n by r e l a t i n g the output t o a l l the i n p u t s , i n c l u d i n g the f a r m e r - s u p p l i e d human and b u l l o c k l a b o u r . Khusro (1964) s t r e s s e d the p o i n t t h a t the e f f i c i e n c y q u e s t i o n not o n l y c o n c e r n s l a n d p r o d u c t i v i t y but s h o u l d encompass t o t a l c o s t of p r o d u c t i o n i n c l u d i n g the v a l u e of non-land f a m i l y s u p p l i e d i n p u t s . He i n d i c a t e d t h a t t h e r e i s a problem of f i n d i n g a p p r o p r i a t e p r i c e s f o r these non-marketed f a c t o r s . He then t r i e d t o c o r r e l a t e net p r o f i t ( i n c l u s i v e of a l l revenues and c o s t s ) t o the l a n d s i z e of the farms. T h i s was thus an e x t e n s i o n of Sen's study s i n c e i t i n c l u d e d f a m i l y s u p p l i e d f a c t o r s o t h e r than l a b o u r , and 1 02 the net r e t u r n t o l a n d was b e t t e r a p p r o x i m a t e d . Khusro found t h a t net p r o f i t per h e c t a r e was p o s i t i v e l y c o r r e l a t e d t o the farm s i z e , but not s i g n i f i c a n t l y so,, f o r s i z e - c l a s s d a t a from 7 r e g i o n s i n I n d i a 2 . I t was S a i n i (1969) who c l e a r l y s t a t e d t h a t the s i z e - e f f i c i e n c y i s s u e was a q u e s t i o n about the r e t u r n s t o s c a l e i n f a r m i n g . He e s t i m a t e d a Cobb-Douglas p r o d u c t i o n f u n c t i o n w i t h l a n d , human man-days, b u l l o c k p a i r - d a y s , f e r t i l i z e r - m a n u r e c o s t and i r r i g a t i o n c o s t s as arguments. Constant r e t u r n s t o s c a l e c o u l d not be r e j e c t e d i n h i s f o u r samples of i n d i v i d u a l farm d a t a from I n d i a 3 . S a i n i a l s o found t h a t the p r o d u c t i o n f u n c t i o n s of the farms ( c l a s s i f i e d i n t o 3 s i z e c l a s s e s ) were the same" and t h a t the r a t i o of m a r g i n a l v a l u e p r o d u c t s 5 over wages f o r l a b o u r were g r e a t e r or c l o s e t o one, w h i l e v e r y much l e s s than one f o r b u l l o c k l a b o u r on the s m a l l farms. Bardhan (1973) e s t i m a t e d Cobb-Douglas p r o d u c t i o n f u n c t i o n s f o r s e v e r a l r e g i o n s i n I n d i a and he c o n c l u d e d t h a t g e n e r a l l y the r e t u r n s t o s c a l e were c o n s t a n t or d e c r e a s i n g except i n wheat r e g i o n s . I n t h e same study he t e s t e d f o r d i f f e r e n c e s of the Cobb-Douglas f u n c t i o n f o r the d i f f e r e n t farm s i z e s 6 . A l t h o u g h the r a t i o s of farm i n p u t s t o l a n d were not c o n s t a n t , he found t h a t the m a r g i n a l v a l u e p r o d u c t s of l a b o u r were h i g h e r than the wage r a t e s 7 . 1 03 A l t h o u g h F a r r e l l (1957) f o r m a l i z e d the a n a l y s i s of e f f i c i e n c y d i f f e r e n c e i n t o i t s components, i t was a study by Y o t o p o u l o s and L a u 8 (1971,1972) which p r o v i d e d a model f o r t e s t i n g the e f f e c t s o f : a: r e t u r n s t o s c a l e (a p r o p e r t y of the p r o d u c t i o n f u n c t i o n ) b: t e c h n i c a l i n e f f i c i e n c y ( f a i l u r e t o o p e r a t e on the t e c h n i c a l l y i n e f f i c i e n t p r o d u c t i o n f u n c t i o n ) c: p r i c e e f f i c i e n c y ( f a i l u r e t o maximize p r o f i t s ) i n the c o n t e x t of the a g r i c u l t u r a l p r o d u c t i o n on s m a l l farms i n a d e v e l o p i n g c o u n t r y . The l a t t e r two e f f i c i e n c i e s t o g e t h e r d e f i n e economic e f f i c i e n c y . Note t h a t both S a i n i (1969) and Bardhan (1973) were a l r e a d y t e s t i n g f o r both t e c h n i c a l e f f i c i e n c y ( e q u a l i t y of the Cobb-Douglas p r o d u c t i o n f u n c t i o n c o n s t a n t s ) and p r i c e e f f i c i e n c y ( e q u a l i t y of the m a r g i n a l p r o d u c t w i t h the market p r i c e ) . Y o t o p o u l o s - L a u (1973), on the b a s i s of I n d i a n d a t a , c o n c l u d e d t h a t the t e c h n o l o g y e x h i b i t e d c o n s t a n t r e t u r n s t o s c a l e , t h a t the t e c h n i c a l e f f i c i e n c y d i f f e r e n c e was i n f a v o u r of s m a l l farms and t h a t both s i z e s of farms were e q u a l l y e f f i c i e n t and had chosen l a b o u r a c c o r d i n g t o p r o f i t m a x i m i z a t i o n . (Labour was a v a r i a b l e f a c t o r i n the model.) The above e m p i r i c a l s t u d i e s used e s t i m a t i o n s of average p r o d u c t i o n f u n c t i o n s based on a c t u a l p r o d u c t i o n d a t a . 1 04 The problem of measuring e f f i c i e n c y ( e s p e c i a l l y t e c h n i c a l e f f i c i e n c y ) has a l s o been s t u d i e d i n the c o n t e x t of comparing a c t u a l farmer e f f i c i e n c y w i t h t e c h n i c a l l y ( e x p e r i m e n t a l ) o p t i m a l farming e f f i c i e n c y l e v e l s . The measurement of the t e c h n i c a l d i f f e r e n c e i s then e x p r e s s e d by an index number. T h i s was the approach taken by Timmer (1970), S h a p i r o and M u l l e r (1977) and Herdt-Mandoc (1981). T h i s method presupposes an i n i t i a l e s t i m a t i o n of a f r o n t i e r p r o d u c t i o n f u n c t i o n ( e i t h e r on the b a s i s of a l i n e a r programming method on e x p e r i m e n t a l data or under the econometric c o n s t r a i n t s of o n e - s i d e d d i s t u r b a n c e s 9 i n the p r o d u c t i o n f u n c t i o n e s t i m a t i o n ) . Once a f r o n t i e r p r o d u c t i o n f u n c t i o n i s c o n s t r u c t e d , an index of r e l a t i v e t e c h n i c a l and a l l o c a t i v e e f f i c i e n c y i s c a l c u l a t e d f o r each f a r m e r . These i n d i c e s are then r e l a t e d t o p e r s o n a l and e n v i r o n m e n t a l c h a r a c t e r i s t i c s of the f a r m e r s . The Herdt-Mandoc (1981) study t r i e d t o i n v e s t i g a t e f e r t i l i z e r use e f f i c i e n c y of P h i l i p i n o farmers by comparing the f a r m e r s ' t e c h n i c a l e f f i c i e n c y w i t h the t e c h n i c a l e f f i c i e n c y of I n t e r n a t i o n a l R i c e I n s t i t u t e e x p e r t s , both farmers and e x p e r t s p r o d u c i n g on p l o t s at the a c t u a l farms. Herdt and Mandoc c o n c l u d e d t h a t both t e c h n i c a l and a l l o c a t i v e e f f i c i e n c y d e c l i n e d w i t h i n c r e a s e s of the farm s i z e and w i t h a d e c r e a s e i n the amount of o f f - f a r m work days by the f a r m e r . 1 05 A f u r t h e r development of the measurement of r e l a t i v e e f f i c i e n c y w i t h the use of index numbers i s t o bypass the e s t i m a t i o n of the p r o d u c t i o n t e c h n o l o g y a l t o g e t h e r . Our problem i s then a s p e c i a l case of measuring p r o d u c t i v i t y d i f f e r e n c e s based on the index number t h e o r y (Diewert 1982). ( T h i s approach was used by A l l e n (1982) t o compare t e c h n i c a l e f f i c i e n c y d i f f e r e n c e s between e n c l o s e d and u n e n c l o s e d farms i n 18th Century England.) In t h i s second p a r t of the overview of the l i t e r a t u r e on the e m p i r i c a l measurement of e f f i c i e n c y d i f f e r e n c e s between farmers i n development c o u n t r i e s , we c o u l d see a growing c o n c e r n f o r a measurement of the e f f i c i e n t use of a l l f a c t o r s of p r o d u c t i o n which goes beyond the l a n d p r o d u c t i v i t y measures. There was, on the one hand, the i d e n t i f i c a t i o n of t h r e e s o u r c e s of p r o d u c t i o n i n e f f i c i e n c y ( d i s c u s s e d i n the next s e c t i o n ) and t h e r e was, on the o t h e r hand, a growing use of two measurement approaches (the p r o d u c t i o n f u n c t i o n e s t i m a t i o n , f r o n t i e r or a v e r a g e , and the index number a p p r o a c h ) . C. SOURCES OF INEFFICIENCY G e n e r a l l y t h r e e s o u r c e s of i n e f f i c i e n c y a r e d i s t i n g u i s h e d i n p r o d u c t i o n . The f i r s t i s "the r e t u r n s t o s c a l e " source of e f f i c i e n c y which f o l l o w s from the c h a r a c t e r i s t i c of the p r o d u c t i o n t e c h n o l o g y t o e x h i b i t an o p t i m a l p r o d u c t i o n s c a l e . The s c a l e of p r o d u c t i o n r e f e r s t o 106 a p r o p o r t i o n a l expansion of a l l i n p u t s which, i n the case of i n c r e a s i n g r e t u r n s t o s c a l e 1 0 , l e a d s t o a more than p r o p o r t i o n a l expansion of the o u t p u t . The c l a i m by economic p l a n n e r s t h a t s m a l l farms a r e i n e f f i c i e n t f o l l o w s from the ' i n c r e a s i n g r e t u r n s t o s c a l e ' assumption i n the mechanized farm t e c h n o l o g y (Wu, Yu, 1980; Chen, 1980). I f t h e r e a r e no r e n t a l markets f o r "machines and farmers do not share the use of the machines or own them j o i n t l y , t hen o n l y l a r g e farms can use machines t o t h e i r f u l l c a p a c i t y . Thus s m a l l farms, who own and use machines would have a h i g h e r machine c o s t per u n i t of ou t p u t and an a g r i c u l t u r a l system of s m a l l farms would be l e s s e f f i c i e n t than a system of l a r g e farms. Even i f s h a r i n g of machines i s p r a c t i c e d , l a r g e farms c o u l d be more e f f i c i e n t i f the machines c o u l d be used on l a r g e r f i e l d s , thus d i m i n i s h i n g the time l o s s (and t r a n s a c t i o n c o s t ) from g o i n g from one s m a l l f a r m e r ' s f i e l d t o a n o t h e r ' s . However, these c o n d i t i o n s f o r i n c r e a s i n g r e t u r n s t o s c a l e may not h o l d g i v e n the Taiwanese s i t u a t i o n . F i r s t l y , g r e a t c a r e was made t o d e v e l o p l o c a l l y made s m a l l machines ( s i m i l a r t o the imported Japanese farm machinery) and a 'machine custom s e r v i c e ' market has d e v e l o p e d . S e c o n d l y , i n the r i c e r e g i o n s , the' l a n d i s i r r i g a t e d from an i r r i g a t i o n network (not from p r i v a t e w e l l s ) , which imposes l i m i t a t i o n s on the f i e l d s t r u c t u r e . T h i r d l y , the 'custom s e r v i c e ' system q u o t e s c o n t r a c t s per h e c t a r e s e r v i c e d , not the time 1 07 used. Where l a r g e machines are u n a v o i d a b l e , f o r the sugar h a r v e s t i n g , the r e f i n e r i e s own the machines and do the h a r v e s t i n g f o r a l l the f a r m e r s . Thus, a l t h o u g h the p l a n n e r s f o r t h e o r e t i c a l reasons b e l i e v e i n i n c r e a s i n g r e t u r n s t o s c a l e , the a c t u a l s t r u c t u r i n g of the a c t i v i t y i n Taiwan may w e l l a l l o w c o n s t a n t r e t u r n s t o s c a l e 1 1 , so t h a t the r e t u r n s t o s c a l e must be e m p i r i c a l l y measured. The second s o u r c e of i n e f f i c i e n c y i s t e c h n i c a l i n e f f i c i e n c y ( F a r r e l l 1957, Yo t o p o u l o s - L a u 1971) which i s a f a i l u r e t o opera t e on the t e c h n i c a l l y e f f i c i e n t p r o d u c t i o n f u n c t i o n 1 2 . Thus, t e c h n i c a l l y i n e f f i c i e n t f a r m e r s use more i n p u t s f o r a same l e v e l of output as t e c h n i c a l l y e f f i c i e n t f a r m e r s . The c l a i m t h a t p a r t - t i m e farmers are i n e f f i c i e n t i s based on the assumption of r e s i d u a l i t y of farm l a b o u r on p a r t - t i m e farms. The f i r s t argument about t h e r e s i d u a l l a b o u r i s d i r e c t l y a t e c h n i c a l i n e f f i c i e n c y argument. The assumptions a r e (a) t h a t non-farm a c t i v i t i e s of the f a m i l y put time and e f f o r t c o n s t r a i n t s on the l a b o u r which i s a v a i l a b l e f o r fa r m i n g and (b) t h a t farm p r o d u c t i o n i s very s e n s i t i v e t o t i m i n g of the a c t i v i t i e s and t o speedy r e a c t i o n t o unexpected weather, d i s e a s e and pest c o n d i t i o n s . As a r e s u l t , p a r t - t i m e f a r m e r s , who must be a t t h e i r o f f - f a r m work, w i l l not be a v a i l a b l e at these c r u c i a l moments and t h e r e w i l l be l e s s p r o d u c t i o n from the i n p u t s than on f u l l - t i m e farms. 108 The second type argument about the r e s i d u a l l a b o u r , which c l a i m s t h a t o f f - f a r m a c t i v i t i e s absorb the h i g h e r q u a l i t y l a b o u r of the f a m i l y , i s a t e c h n i c a l i n e f f i c i e n c y argument o n l y i f more assumptions are added. These assumptions a r e (a) t h a t the lower q u a l i t y f a m i l y members make the d e c i s i o n s on p a r t - t i m e farms, (b) t h a t the h i g h e r q u a l i t y members make the d e c i s i o n s on f u l l - t i m e farms, and (c) t h a t lower q u a l i t y f a m i l y members are worse managers than h i g h e r q u a l i t y members and so w i l l g e n e r a l l y use more i n p u t s f o r a same l e v e l of o u t p u t . The low q u a l i t y members are the p h y s i c a l l y weak, the o l d , the uneducated and the women, thus the f a m i l y members who d i d not f i n d o f f - f a r m employment. That low e d u c a t i o n l e a d s t o bad management i s p o s s i b l y t r u e 1 3 , but t h a t the o t h e r c h a r a c t e r i s t i c s 1 " i n f l u e n c e management a b i l i t y i s d e b a t a b l e . A l s o t h a t management must be done by the farming members of the f a m i l y does not f o l l o w . I f none of the l a t t e r assumptions h o l d s , then t h i s second argument about the r e s i d u a l l a b o u r i s not p a r t of the t e c h n i c a l e f f i c i e n c y i s s u e but i n s t e a d i s p a r t of the a l l o c a t i v e e f f i c i e n c y i s s u e . The t h i r d source of i n e f f i c i e n c y i s a l l o c a t i v e i n e f f i c i e n c y ( F a r r e l l 1957, Y o t o p o u l o s - L a u 1971) and i s n o r m a l l y d e f i n e d as a f a i l u r e t o maximize p r o f i t s when the farmers f a i l t o equate the m a r g i n a l v a l u e p r o d u c t of each i n p u t t o i t s p r i c e and the m a r g i n a l c o s t of each o u t p u t t o i t s p r i c e . The p r o f i t m a x i m i z i n g b e h a v i o u r of each farmer 1 09 thus e n s u r e s t h a t the m a r g i n a l p r o d u c t i v i t y of each f a c t o r and the m a r g i n a l c o s t of each output i s e q u a l i z e d a c r o s s f a r m e r s . And t h i s e q u a l i t y of f a c t o r p r o d u c t i v i t i e s and m a r g i n a l c r o p c o s t s a c r o s s farmers i s the c o n d i t i o n f o r the maximal t o t a l p r o d u c t i o n of o u t p u t s from the a g r i c u l t u r a l r e s o u r c e s . However, note t h a t the a l l o c a t i v e e f f i c i e n c y i s s u e i s c l o s e l y t i e d t o the e x i s t e n c e of markets which p r o v i d e the farmers w i t h the o p p o r t u n i t y p r i c e s of the p r o d u c t i o n v a r i a b l e s f o r t h e i r a l l o c a t i v e d e c i s i o n s . P a r t of the q u e s t i o n i n t h i s t h e s i s i s whether the l a n d market i s wo r k i n g , and, i f i t d o e s n ' t , whether the far m e r s have f u l l c h o i c e on the a l l o c a t i o n of the o t h e r p r o d u c t i o n v a r i a b l e s . The l a t t e r depends on the e x i s t e n c e of markets f o r a l l non-land p r o d u c t i o n v a r i a b l e s . But t h i s b r i n g s us t o t h e i s s u e of the f a m i l y s u p p l i e d l a b o u r . Farm h o u s e h o l d members may be of two t y p e s : 1) the mo b i l e members f o r whom the d i s u t i l i t y of o f f - f a r m work i s e q u a l t o the d i s u t i l i t y of s e l f - e m p l o y e d farm work. These members w i l l compare the market wage w i t h the m a r g i n a l v a l u e p r o d u c t i n farming and thus the l a b o u r s u p p l y f o r f a r m i n g from t h e s e members i s a c h o i c e v a r i a b l e . Here one can exp e c t an adjustment of l a b o u r t o the l a n d a l l o c a t i o n . 2) the immobile members f o r whom the d i s u t i l i t y of o f f - f a r m work i s much g r e a t e r than the d i s u t i l i t y of s e l f - e m p l o y e d 1 10 farm work. These a r e the f a m i l y members who do not want t o work away from the home (mothers w i t h s m a l l c h i l d r e n , o l d e r women) or who do not want t o be t i e d t o c o n t r a c t e d time p e r i o d s ( o l d e r f a r m e r s , weaker p e o p l e , those who do want t o s e t t h e i r own work p a c e ) . The l a b o u r s u p p l y f o r fa r m i n g from t h e s e f a m i l y members i s thus a f i x e d f a c t o r i n the f a r m i n g a c t i v i t y ( d e t e r m i n e d by the f a m i l y s t r u c t u r e ) i f we assume the l e i s u r e - l a b o u r c h o i c e t o be s o l v e d . In t h i s s i t u a t i o n , t he q u e s t i o n of a f l e x i b l e system of a l l o c a t i n g l a n d t o the households becomes i m p o r t a n t f o r the f u l l employment of t h i s a g r i c u l t u r a l r e s o u r c e . Thus where the l a b o u r i s not f u l l y m o b i l e , t h e r e can be underemployment of immobile l a b o u r on c e r t a i n farms (maybe on s m a l l f u l l - t i m e ) , underemployment of the l a n d on o t h e r s (maybe on s m a l l p a r t - t i m e ) and use of mob i l e l a b o u r f o r f a r m i n g on y e t o t h e r farms (maybe-on l a r g e f u l l - t i m e ) . I f l a n d c o u l d be t r a n s f e r r e d w i t h o u t c o n s t r a i n t s , t h e r e would be more a g r i c u l t u r a l o u t p u t ( u s i n g the underemployed immobile l a b o u r of some households on the underemployed l a n d of o t h e r h o u s e h o l d s , or r e p l a c i n g m o b i l e w i t h immobile l a b o u r ) and a l s o more output i n the o t h e r s e c t o r s ( u s i n g the m o b i l e l a b o u r s h i f t e d out of a g r i c u l t u r e ) . T h i s g a i n i n a g r i c u l t u r a l p r o d u c t i o n from a l a n d r e a l l o c a t i o n would be the l a r g e r , the l e s s the l a n d and the immobile l a b o u r a r e s u b s t i t u t a b l e i n the a g r i c u l t u r a l p r o d u c t i o n t e c h n o l o g y , 111 s i n c e m a r g i n a l v a l u e p r o d u c t s would then v a r y c o n s i d e r a b l y w i t h the d i f f e r e n t l a b o u r / l a n d r a t i o s on the farm t y p e s . Note t h a t t h i s s u b s t i t u t i o n p o s s i b i l i t y depends on the number of p o s s i b l e c r o p s (each h a v i n g a v e r y d i f f e r e n t t e c h n o l o g y ) and on the s u b s t i t u t a b i 1 i t y of the immobile l a b o u r w i t h o t h e r i n p u t s . U l t i m a t e l y , the co n c e r n of t h i s t h e s i s i s the proper a l l o c a t i o n of l a n d and l a b o u r a c r o s s farm h o u s e h o l d s so t h a t the a g r i c u l t u r a l s e c t o r has an o p t i m a l output from i t s l a b o u r and l a n d r e s o u r c e s . T h i s i s a t e s t of the h y p o t h e s i s t h a t the d i s t r i b u t i o n of l a n d t o the households (and thus to the l a b o u r endowment of the f a m i l y ) i s not o p t i m a l because the p r e s e n t l a n d l e g i s l a t i o n i s e f f e c t i v e l y b l o c k i n g the working of the l a n d m a r k e t 1 5 . The a l t e r n a t i v e t o the d i s t r i b u t i o n of l a n d t o the households would be t o have households a d j u s t the l a b o u r t o the l a n d endowment. T h i s i s an o p t i o n i f a w e l l working l a b o u r market e x i s t s , and indeed the m o b i l e f a m i l y members can and have a d j u s t e d t o the l a n d endowment by the expansion of p a r t - t i m e f a r m i n g . But households have an endowment of immobile f a m i l y members t o o , and the economy i s not making o p t i m a l use of i t s r e s o u r c e s i f the a g r i c u l t u r a l s e c t o r does not use t h i s l a b o u r . The c h o i c e of the o p t i m a l s i z e - p a r t i c i p a t i o n c o m b i n a t i o n .for the s e c t o r must u l t i m a t e l y be det e r m i n e d by the o p t i m a l use of the l a n d , the mo b i l e f a m i l y household members and the immobile members, a l l w i t h i n the c o n t e x t of 1 1 2 the need of the n o n - a g r i c u l t u r a l s e c t o r s f o r the mobile f a m i l y members and the f o o d needs of the i n c r e a s i n g l y r i c h p o p u l a t i o n 1 6 . D. TREATMENT OF THE VARIABLE INPUTS-OUTPUT MIX The value-added f u n c t i o n s e s t i m a t e d a r e s p e c i a l forms of a v a r i a b l e p r o f i t f u n c t i o n i n which r e a l net farm income i s assumed t o be a f u n c t i o n of the q u a n t i t i e s of f a m i l y s u p p l i e d i n p u t s . T h i s s p e c i f i c a t i o n a l l o w s ( 1 ) an e s t i m a t i o n of the r e t u r n s t o s c a l e i n f a m i l y s u p p l i e d i n p u t s , ( 2 ) a comparison of t h e m a r g i n a l p r o d u c t s of the f a m i l y s u p p l i e d i n p u t s a c r o s s farm t y p e s , and ( 3 ) a comparison of the net incomes of f u l l - and p a r t - t i m e farms r e l a t i v e t o t h e i r q u a n t i t i e s o f . f a m i l y s u p p l i e d f a c t o r s . These r e s u l t s bear d i r e c t l y on the i s s u e s of r e t u r n s t o s c a l e , a l l o c a t i v e e f f i c i e n c y and t e c h n i c a l e f f i c i e n c y r e s p e c t i v e l y . We s t a r t from a model which e x p r e s s e s the g e n e r a l concern of the a g r i c u l t u r a l a u t h o r i t i e s . The^ a u t h o r i t i e s want an o p t i m a l use of a g r i c u l t u r a l r e s o u r c e s , but the system uses H p r i v a t e f a r m e r s as the d e c i s i o n makers. So the aim of the a u t h o r i t i e s can be f o r m a l i z e d a s : H h H h h h h H ( 1 ) Max pZy - wZx s . t . g(y ,x ,v ) > 0 and Zv -V = 0 h h h where y ( o u t p u t s ) and x ( i n p u t s ) a re marketed a t r e s p e c t i v e l y p and w, but v a r e f a m i l y s u p p l i e d f a c t o r s who 1 1 3 ar e not t r a d e d . The s e c t o r has a t o t a l number V of the l a t t e r r e s o u r c e s . The o p t i m i z a t i o n r e q u i r e s : h h h h (2) p - 9g(y ,x ,v )/9y = 0 Vh households h h h h (3) -w - 9g(y ,x ,v )/9x = 0 Vh h h h (4) g.(y ,x ,v ) > 0 Vh h h h h (5) X - 9g(y ,x ,v )/9v = 0 Vh These c o n d i t i o n s e x c e p t the l a s t one, are a l s o s a t i s f i e d i f each farmer h maximizes the value-added on h i s farm: h h h h h (6) Max py - wx s . t . g(y ,x ,v )>0 y ,x and the r e s o u r c e a l l o c a t i o n i n the s e c t o r i s then o p t i m a l i f the d i s t r i b u t i o n of the f a m i l y s u p p l i e d f a c t o r s i s such t h a t the c o n d i t i o n (5) i s s a t i s f i e d . We d e v e l o p the s p e c i a l v a l u e - a d d e d approach f o r t h i s l a t t e r i n v e s t i g a t i o n . The s p e c i a l v a l u e - a d d e d approach used i n t h i s study i s a b l e n d of the inde x number approach and the p r o d u c t i o n f u n c t i o n approach. The pure index number approach would be the most s i m p l e approach t o the measurement of t o t a l f a c t o r p r o d u c t i v i t y on the d i f f e r e n t farm t y p e s 1 7 . However, i t r e q u i r e s the a p r i o r i assumptions t h a t the t e c h n o l o g y i s c o n s t a n t r e t u r n s t o s c a l e , t h a t t h e r e i s no t e c h n i c a l i n e f f i c i e n c y , and t h a t a l l markets e x i s t except one: l a n d , i n t h i s s t u d y . Under th e s e a s s u m p t i o n s , i f p r i c e s a r e the same f o r a l l f a r m e r s , net p r o f i t per u n i t of l a n d i s the 1 14 m a r g i n a l v a l u e product of l a n d , and f o r a l l o c a t i v e e f f i c i e n c y i t sh o u l d be e q u a l a c r o s s a l l f a r m e r s . I f p r i c e s d i f f e r between f a r m e r s , a d e f l a t o r method can be used on the net r e t u r n so t h a t the a l l o c a t i v e e f f i c i e n c y can be measured by the v a l u e of k i n the' f o l l o w i n g r e l a t i o n s h i p s between a c t u a l r e a l net r e t u r n and the o p t i m a l p o s s i b l e r e a l net r e t u r n from the l a n d i n p u t : f o r farmer 1 : where p: output p r i c e w: i n p u t p r i c e (7) ( p 1 y 1 - w 1x 1)/[n( P 1,w 1)/n( P°,w°)] = k 1 n(p°,w°)v 1 y: o u t p u t and f o r farmer 0: x: bought i n p u t V: l a n d i n p u t (8) (p°y° - w°x 0)/[n(p 0,w 0)/n(p°,w 0)] = k° n(p°,w°)v° Where n(p°,w°) i s the s o l u t i o n t o (6) f o r the p r i c e s (p°,w°) and V=1 u n i t of l a n d . A l l o c a t i v e e f f i c i e n c y means t h a t k=1, ( l e s s e f f i c i e n t f a r m e r s have k < l ) . Thus i n t h i s method, o v e r a l l a l l o c a t i v e i n e f f i c i e n c y of l a n d shows i n k v a r i a t i o n s , and no i n f o r m a t i o n i s g i v e n on the s o u r c e s of the a l l o c a t i v e i n e f f i c i e n c y , o n l y t h a t t h e r e i s a l l o c a t i v e i n e f f i c i e n c y . There a r e s e v e r a l problems w i t h t h i s index number app r o a c h . I t i s v i t a l l y dependent on the assumption than (p,w) a r e the c o r r e c t o p p o r t u n i t y p r i c e s , so t h a t a f u l l s et of markets must e x i s t . As argued the p r e v i o u s s e c t i o n , some f a m i l y l a b o u r may not be m a r k e t a b l e , and 1 15 assuming a g r i c u l t u r a l wage r a t e s as the o p p o r t u n i t y c o s t may be d i s t o r t i v e . I n v e r s e l y , the f a m i l y l a b o u r c o u l d be taken i n s t e a d of l a n d as the f a c t o r of e v a l u a t i o n , but s i n c e l a n d markets may not have been v e r y a c t i v e and c o r r e c t l a n d o p p o r t u n i t y c o s t s a re hard t o f i n d , t h i s may w e l l be e q u a l l y d i s t o r t i v e . A d d i t i o n a l l y , the i s s u e of c o n s t a n t r e t u r n s t o s c a l e and t e c h n i c a l i n e f f i c i e n c y must be measured, not assumed a p r i o r i . Thus we d e c i d e d t h a t the index number approach was not u s e f u l l i n i t s e n t i r e t y . The a l t e r n a t i v e was t o use the t r a n s f o r m a t i o n or p r o f i t f u n c t i o n approach. To a v o i d the s i m u l t a n e o u s e q u a t i o n b i a s i n a t r a n s f o r m a t i o n f u n c t i o n e s t i m a t i o n , i t i s b e t t e r t o e s t i m a t e p r o f i t f u n c t i o n s , by e s t i m a t i n g the d e r i v e d supply-demand system of the v a r i a b l e s f o r which markets e x i s t . T h i s would mean the e s t i m a t i o n of the p r o f i t f u n c t i o n from the a c t u a l p r o f i t , as i n Y o t o p o u l o s and Nugent (1976), p97-8: where (9) (qk/A) . z = II(qk/A;v) w i t h the e s t i m a t i o n of a system: q=p : output p r i c e =w : i n p u t p r i c e z=y : output =-x : i n p u t v : f i x e d f a c t o r (10) z = an/9(k q /A) = f ( q k / A ; v ) . A/k i i i i The a l l o c a t i v e i n e f f i c i e n c y i n the use of marketed v a r i a b l e s (z ) can be measured by the v a l u e of k a s s o c i a t e d w i t h i each farm t y p e . The t e c h n i c a l i n e f f i c i e n c y can be measured 116 by the v a r i a t i o n i n A a s s o c i a t e d w i t h each farm t y p e . R e t u r n s t o s c a l e can be determined from the f u n c t i o n n ( ) . I f t h e r e i s more than one f i x e d f a c t o r v, then the v a r i a t i o n s i n the m a r g i n a l v a l u e p r o d u c t s (9II/9v) a c r o s s farm t y p e s can i n d i c a t e t h a t t h e r e may be a g a i n f o r the s e c t o r from o r g a n i z i n g markets f o r these f a c t o r s . Thus t h i s approach i s complete, but we cannot use i t because we do not have enough p r i c e o b s e r v a t i o n s i n our sample t o e s t i m a t e II(qk/A;v) f o r the parameters of q. We e s t i m a t e a value-added model t h a t has f e a t u r e s of both a pproaches: a) the index approach i s used t o d e a l w i t h the o u t p u t and bought i n p u t s , and b) the p r o d u c t i o n f u n c t i o n approach i s used t o d e a l w i t h the f a m i l y f a c t o r s . We s t a r t from the assumption t h a t the farmer a t t e m p t s t o choose the output mix and the bought i n p u t mix to maximize the net p r o f i t a v a i l a b l e as a r e t u r n t o the f a m i l y s u p p l i e d f a c t o r s , g i v e n the t e c h n o l o g y . Thus the c h o i c e f o r a farmer f a c i n g the p r i c e s (p,w)>>0 w i t h a t r a n s f o r m a t i o n f u n c t i o n g ( y , x,v) i s t o : (11) max {py - wx | g( y , x , v ) > 0} y,x where: y: output q u a n t i t i e s x: bought i n p u t s v: f a m i l y i n p u t s p: o u t p u t p r i c e w: i n p u t p r i c e and t h e s o l u t i o n i s n(p,w,v). (Note t h a t t h i s i s a l s o the the s o l u t i o n t o e q u a t i o n (6) and thus i m p l i e s c o n d i t i o n s ( 2 ) - ( 4 ) t o be s a t i s f i e d . ) 1 1 7 As the sample c o n t a i n s o n l y n i n e o b s e r v a t i o n y e a r s 1 8 , t h e r e are not enough o b s e r v a t i o n s on p r i c e s (p,w) t o e s t i m a t e the parameters of II(p,w,v) i n (p,w). So we assume t h a t p and w are s e p a r a b l e from v: (12) n(p,w,v) = n [ f ( p , w ) , v ] We assume i n f a c t t h a t the r e l a t i o n s h i p i s : (13) n [ f ( p , w ) , v ] = f(p,w) G(v) so t h a t the o b s e r v a t i o n f o r each farmer i s : (14) py - wx = f(p,w) G(v) The l e f t hand s i d e i s the o b s e r v e d net p r o f i t or value-added. On the r i g h t hand s i d e we have f(p,w) which i s a f u n c t i o n of the p r i c e s and i s thus a v a l u e - a d d e d p r i c e . The second p a r t G(v) i s a v a l u e - a d d e d f u n c t i o n of s e l f - s u p p l i e d f a c t o r s and t h u s a form of o u t p u t q u a n t i t y produced by the f a m i l y f a c t o r s . So the s e l f - s u p p l i e d f a c t o r s produce an output G(v) which i s p r i c e d a t f(p,w) and t h i s i s e q u a l t o the observed farm income f o r the f a m i l y . T h i s form of s e p a r a b i l i t y assumption i s e q u i v a l e n t t o imposing c o n s t r a i n t s on t h e t e c h n o l o g y , such t h a t the H i c k s - A l l e n s u b s t i t u t i o n e l a s t i c i t i e s between the s e l f - s u p p l i e d f a c t o r s (v) and the v a r i a b l e commodities a r e : 118 (15) * = ( n 3 2 n/3q3v)/[ o n / 3 v ) o n / 3 q ) ] = g(q)«G(v) (3g/3q)•(3G/3v) = 1 q = p,w g(q)•(3G/3v) • G(v).(3g/3q) where II = g(q) G(v) i s the net revenue function. The interpretation i s that there are no outputs nor bought inputs that have a special link to any self-supplied factor. market prices: (16) farmer 1: p 1y 1 - w'x1 = f ( p \ w 1 ) G(v 1) (17) farmer 0: p°y° - w°x° = f(p°,w°) G(v°) or for farmer 1: (18) (p 1y 1 - w'x1 )/[f (p 1 ,w1 )/f (p°,w°) ] = f(p°,w°) G(vM and for farmer 2: (19) (p°y° - w°x°)/[f(p°,w°)/f(p°,w°)] = f(p°,w°) G(v°) Thus net income deflated by [f(p 1,w 1)/f(p°,w°)] depends on v in the same way for a l l farmers. The link between the index number approach and th i s value-added approach can be seen in comparison of equations (7)-(8) and (18)-(°19). Note that [f(p 1,w 1/f(p°,w°)] i s a 'true' price index: (20) P 1 = P[p 1 ,y\p°,y°,w 1 ,x1 ,w°,x°] = f (p 1 ,w 1 )/f (p° , w° ) If we now compare two farmers facing d i f f e r e n t 1 19 which we assume to be a F i s h e r i d e a l p r i c e index of q=(p,w) (21) P 1 = [Z s°(q 1/q 0)] 1' 2 [ Z s 1 (q°/q 1 ) ]" 1 / 2 i i i i i i i i where s 1 = q 1 z 1 / Z q 1 z 1 the share of an o utput ( y 1 > 0) or an i n p u t ( x 1 > 0) s i n c e z = ( y , - x ) . The use of t h i s i n d e x of p r i c e s e s s e n t i a l l y means t h a t we are dssuming the f o l l o w i n g f u n c t i o n f o r f(p,w) = g ( q ) : (22) f(p,w) = g(q) = [Z Z a q q ] 1'2 i j i j i j T h i s F i s h e r index i s e xact f o r a q u a d r a t i c mean of o r d e r r=2 of output and v a r i a b l e i n p u t p r i c e s (Diewert 1978; A l l e n , D i e w e r t 1981). I t s h o u l d be noted t h a t the use of t h i s d e f l a t o r method i s l e s s r e s t r i c t i v e than the u s u a l d o u b l e value-added d e f l a t o r m e t h o d 1 9 . No s e p a r a b i l i t y i s imposed between the o u t p u t s and the v a r i a b l e f a c t o r s i n our s t u d y (Bruno 1975, Diewert 1975). The F i s h e r index of p r i c e s (P) i s c a l c u l a t e d on the t t b a s i s n a t i o n a l p r i c e d a t a (p , w' ) f o r the farm o u t p u t s and t v a r i a b l e i n p u t s u s i n g sample share i n f o r m a t i o n (s ) , u s i n g t h e n i n e y e a r s of p r i c e o b s e r v a t i o n s ( n i n e a n n u a l p r i c e o b s e r v a t i o n s f o r 26 o u t p u t s and i n p u t s ) . In summary, we d e r i v e d a model which e x p r e s s e s the p r o d u c t i o n s i t u a t i o n of the f a r m e r s , so t h a t we can examine the e f f i c i e n c y i s s u e s i n t h e i r e f f e c t on the r e l a t i o n s h i p between the a c t u a l d e f l a t e d net revenue a v a i l a b l e t o the f a m i l y s u p p l i e d f a c t o r s and the l e v e l s of the f a m i l y 1 20 s u p p l i e d f a c t o r s : (23) ( p ' y 1 - w'xM/P1 = f(p°,w°) G(v') T h i s model was choosen f o r two main r e a s o n s : 1) the The f i v e f a m i l y s u p p l i e d f a c t o r s c o n s i d e r e d produce a v a l u e added f o r the s e c t o r which i s from 51% t o 63% of the farm output v a l u e (see t a b l e 4.3) and t h e s e f a c t o r s a r e the v a r i a b l e s whose d i s t r i b u t i o n over the households i s of such c o n c e r n t o the a g r i c u l t u r a l a u t h o r i t i e s . The f i v e f a m i l y f a c t o r s a r e the l a n d a r e a (paddy, d r y ) , the f a m i l y l a b o u r - used (male, female) and the t o t a l v a l u e of the farm a s s e t s . 2) There was not enough p r i c e d a t a t o i n v e s t i g a t e the i n e f f i c i e n c i e s i n the c r o p c h o i c e and the bought i n p u t c h o i c e i n d e t a i l . However, s i n c e the consequences of these c h o i c e s a r e c o n c e n t r a t e d i n the o b s e r v e d net revenue v a l u e , t h i s method i n d i r e c t l y does measure the c h o i c e e f f i c i e n c y . The problem s t u d i e d i s t h u s d i r e c t e d t o a nswering the q u e s t i o n whether the p r e s e n t a g r a r i a n s t r u c t u r e w i t h i t s l a n d , f a m i l y l a b o u r and farm a s s e t d i s t r i b u t i o n over the h o u s e h o l d s i s a b l e t o produce the maximal v a l u e - a d d e d f o r the s e c t o r from t h e s e r e s o u r c e s . T h i s w i l l depend on: 1) whether value-added expands more, l e s s or p r o p o r t i o n a l t o a p r o p o r t i o n a l e x p a n s i o n of a l l the f a m i l y farm f a c t o r s (the r e t u r n s t o s c a l e i s s u e ) as e s t i m a t e d by (24) G(Xv)=X kG(v) H 0 : k>0 121 2) Whether some h o u s e h o l d s , p a r t i c u l a r l y the p a r t - t i m e h o u s e h o l d s , have l e s s a c t u a l value-added ( I I ) from t h e i r f a m i l y farm f a c t o r s than s i m i l a r l y endowed f u l l - t i m e h o u seholds can produce (the t e c h n i c a l e f f i c i e n c y i s s u e ) as e s t i m a t e d by FT FT PT PT PT PT (25) G(v ) = n = n = G(v ) - E H 0 : E >0 And 3) whether t h e r e c o u l d be a g a i n i n the s e c t o r ' s t o t a l v a l u e added by changing the f a m i l y s u p p l i e d f a c t o r mix of the farmers ( the a l l o c a t i v e e f f i c i e n c y i s s u e ) . T h i s q u e s t i o n can be answered by comparing the m a r g i n a l v a l u e p r o d u c t s of each f a m i l y f a c t o r a c r o s s the farmers s i n c e a l l o c a t i v e o p t i m a l i t y r e q u i r e s these t o be e q u a l a c r o s s f a r m e r s , as the system ( 1 ) - ( 5 ) has now become: H h (26) Max Zf(p°,w°) G(v ) h w i t h f i r s t o r d e r c o n d i t i o n : h h (27) f(p°,w°) 9G(v )/9v H h (28) I v - V = 0 h T h i s i s e q u i v a l e n t t o a s k i n g whether f a r m e r s a r e e i t h e r a b l e t o a l l o c a t e the o u t p u t s and bought i n p u t s i n such a way t h a t the p r o d u c t i v i t y l e v e l s of the ( f i x e d ) s e l f - s u p p l i e d f a c t o r s a r e e q u a l i z e d a c r o s s farms, or a l t e r n a t i v e l y , whether they a r e a b l e t o choose the f a m i l y f a c t o r s because the markets H h s . t . Zv -V=0 h - X = 0 Vh 122 work and thus the f a m i l y f a c t o r s a r e mo b i l e (then X=w). The farmers may even f o l l o w both s t r a t e g i e s a t the same t i m e , depending on the f a m i l y p r o d u c t i o n f a c t o r s . Thus f o r example, amounts of farm c a p i t a l and male l a b o u r c o u l d have been chosen t o e q u a l i z e the p r o d u c t i v i t i e s t o the i n t e r e s t c o s t and the wage r e s p e c t i v e l y ( t h e r e b y i n d i c a t i n g the m o b i l i t y of these f a c t o r s ) , w h i l e f o r l a n d and female l a b o u r t h e r e might be an e q u a l i z a t i o n of the m a r g i n a l p r o d u c t s a c r o s s farmers because of c o r r e c t c h o i c e of output mix (and i t s a s s o c i a t e d bought i n p u t m i x ) . E. FUNCTIONS Our aim i s t o e s t i m a t e f u n c t i o n s o f : (29) py - wx / P = f(p°,w°)G(v) = n(v) The l e f t hand s i d e i s r e a l net income and i s d i r e c t l y computed from the d a t a . To e s t i m a t e the model, we must choose f u n c t i o n a l forms f o r H ( v ) . These i n d i c a t e the r e l a t i o n s h i p of the f a m i l y s u p p l i e d f a c t o r s t o the r e a l net income. As not a l l farms use male l a b o u r or female l a b o u r , some of the components of v can be z e r o , t h e r e f o r we cannot use Cobb-Douglas or t r a n s l o g s p e c i f i c a t i o n s . I n s t e a d , we use the l i n e a r f u n c t i o n and two of i t s more f l e x i b l e f u n c t i o n a l forms. A l s o , p r o d u c t i o n i s not p o s s i b l e w i t h o u t the l a n d i n p u t so t h a t the e s t i m a t e d f u n c t i o n cannot have a c o n s t a n t 2 0 . In the next s e c t i o n s we d e s c r i b e the l i n e a r 1 23 f u n c t i o n w i t h dummy v a r i a b l e s ( c a l l e d ' l i n e a r dummy'), the ' g e n e r a l i z e d l i n e a r ' f u n c t i o n and the r e s t i c t e d a p p r o x i m a t i o n of b o t h : the ' l i n e a r ' . f u n c t i o n . E.1 The L i n e a r Dummy model The f i r s t f u n c t i o n t h a t we propose as an a p p r o x i m a t i o n of n(v) i s a l i n e a r f u n c t i o n i n v where the c o e f f i c i e n t s of v a r e a l l o w e d t o v a r y w i t h the farm s i z e and p a r t i c i p a t i o n 2 1 . T h i s i s thus a l i n e a r f u n c t i o n of v w i t h s l o p e dummy v a r i a b l e s d : k k k k (30) n(v) = Z (a + Z a d + Z a d ) v k 0 s s s p p p s : s i z e c l a s s p : p a r t i c i p a t i o n k = 1 . . . 5 i n p u t s For farmers w i t h c h a r a c t e r i s t i c s ( s , p ) , the v a l u e m a r g i n a l k pr o d u c t (or shadow p r i c e ) of the f a m i l y f a c t o r v i s : k k k k (31) VMP = a + a + a s = S , M sp 0 s p p = LP,PT1,PT2 0 = L,FT (base) T h i s f u n c t i o n a l l o w s us t o e x p l o r e some e f f i c i e n c y i s s u e s . A l l o c a t i v e e f f i c i e n c y can be t e s t e d d i r e c t l y f o r the farm t y p e s , because the magnitude of a and a shows whether the s P v a l u e m a r g i n a l p r o d u c t s of the f a c t o r s v a r y w i t h s i z e and p a r t i c i p a t i o n . I f markets e x i s t f o r the f a c t o r , then one can compare t h e v a l u e m a r g i n a l p r o d u c t s t o the market p r i c e s . I f markets do not e x i s t , one can compare the v a l u e m a r g i n a l p r o d u c t s a c r o s s farmers s i n c e t h i s shows whether the f a c t o r i s a l l o c a t e d c o r r e c t l y i n the s e c t o r . 1 24 The l i n e a r dummy v a r i a b l e p r o d u c t i o n f u n c t i o n model a u t o m a t i c a l l y imposes c o n s t a n t r e t u r n s t o s c a l e on the t e c h n o l o g y . But we can compare the e f f i c i e n c y of l a r g e and s m a l l f a rms, a l t h o u g h we can not d i s t i n g u i s h i n c r e a s i n g r e t u r n s t o s c a l e from t e c h n i c a l e f f i c i e n c y t h a t improves w i t h s i z e . Measurement of t e c h n o l o g i c a l e f f i c i e n c y can be done by comparing the exp e c t e d net r e t u r n s from the f a c t o r s as g i v e n i n I T ( v ) 2 2 and the a c t u a l r e t u r n s , and by i n v e s t i g a t i n g whether t h i s d i f f e r e n c e i s s y s t e m a t i c a l l y a s s o c i a t e d w i t h the p a r t i c i p a t i o n c h a r a c t e r i s t i c or the s i z e of t he farm. E.2 The L i n e a r model The s i m p l e l i n e a r f u n c t i o n i s a r e s t r i c t e d form of th e the ' l i n e a r dummy model' as the c o e f f i c i e n t s of the dummy v a r i a b l e s a r e r e s t r i c t e d t o be z e r o : k k (32) n ( v ) = Z a v k 0 The s i m p l e l i n e a r f u n c t i o n i s a l s o a r e s t r i c t e d form of the g e n e r a l i z e d l i n e a r f u n c t i o n , as p r e s e n t e d n e x t . I f the value-added f u n c t i o n i s l i n e a r , then the assu m p t i o n t h a t f a r m e r s have s u f f i c i e n t o u t p u t and bought i n p u t c h o i c e t o a d j u s t p e r f e c t l y t o f i x e d endowments of the f a m i l y f a c t o r s can be a c c e p t e d . In t h i s c a s e , l a c k of markets f o r some of the f a m i l y f a c t o r s does not c r e a t e 1 25 a l l o c a t i v e i n e f f i c i e n c y of r e s o u r c e s i n the s e c t o r . The l i n e a r i t y of the e s t i m a t e d f u n c t i o n means t h a t m a r g i n a l p r o d u c t s . a r e c o n s t a n t s , and thus e q u a l f o r a l l f a r m e r s , so t h a t t h e r e c o u l d not be a g a i n f o r the s e c t o r from a t r a n s f e r of f a m i l y r e s o u r c e s from one farmer t o a n o t h e r . E.3 The G e n e r a l i z e d L i n e a r Model An a l t e r n a t i v e t o the p r e v i o u s p r o d u c t i o n models i s t o choose a p r o d u c t i o n t e c h n o l o g y where a l l farmers a re assumed t o have the same b a s i c t e c h n o l o g y but t h i s t e c h n o l o g y i s more f l e x i b l e i n i t s s t r u c t u r e of combining f a c t o r s t o produce net p r o f i t . T h i s f u n c t i o n does not impose c o n s t a n t r e t u r n s t o s c a l e a p r i o r i and the m a r g i n a l r a t e s of s u b s t i t u t i o n between f a c t o r s can change w i t h i n t h i s t e c h n o l o g y . We approximate the t e c h n o l o g i c a l r e l a t i o n s h i p between f i x e d f a c t o r s and the net r e t u r n s f o r f i x e d f a c t o r s w i t h the g e n e r a l i z e d l i n e a r f u n c t i o n ( D i e w e r t , 1973; p. 295): (33) n(V) = 21 a v 1 / 2 + 21 I a v 1 / 2 v 1 ' 2 + Z. 0 v i i i i # j i j i j i i i where symmetry i s imposed. No c o n s t a n t i s p r e s e n t because t h e r e i s no p o s s i b i l i t y of net revenue w i t h o u t the use of l a n d . Note, when a and a a r e r e s t r i c t e d t o be z e r o , t h a t i i j the g e n e r a l i z e d l i n e a r f u n c t i o n c o l l a p s e s i n t o the l i n e a r f u n c t i o n . 1 26 Of the t h r e e proposed f u n c t i o n s , t h i s f u n c t i o n a l l o w s us t o e x p l o r e the e f f i c i e n c y i s s u e s i n g r e a t e s t d e t a i l . The t e c h n o l o g y i s l i n e a r l y homogeneous i f a =0 V i , thus c o n s t a n t r e t u r n s t o s c a l e i s a h y p o t h e s i s i w h ich can be t e s t e d . I f the a *0 then the t e c h n o l o g y i s i not h o m o t h e t i c . (See i n t e r p r e t a t i o n of n o n - h o m o t h e t i c i t y i n the comments t o t a b l e E.9 i n appendix E.) The v a l u e m a r g i n a l p r o d u c t (or shadow p r i c e ) of a k f i x e d f a c t o r v f o r a farmer h i s : . h h h h (34) VMP = a ( 1/v ) 1 / 2 + I a (v /v ) 1 / 2 + 0 k k k i i k i k k Thus t h e shadow p r i c e of the f a c t o r v i s dependent on the endowments of a l l the f a c t o r s when a *0 . The t e c h n o l o g y i j a l l o w s the farmers the p o s s i b i l i t y of combining t h e i r f a c t o r s i n such a way t h a t e q u a l i t y of the shadow p r i c e s of t h e s e f a c t o r s a c r o s s f a r m e r s may r e s u l t . We t e s t f o r t h i s p o s s i b i l i t y by c a l c u l a t i n g each farmer's shadow p r i c e s 2 3 and then t e s t i n g t h e i r e q u a l i t y a c r o s s the farm s i z e and p a r t i c i p a t i o n c h a r a c t e r i s t i c . Thus we e s t i m a t e dummy v a r i a b l e r e g r e s s i o n s of the c a l c u l a t e d shadow p r i c e s , k (VMP ): sp A k k k k (35) VMP = 7 + I 7 d + I 7 d k = 1...5 i n p u t s s p O s s s p p p h: farmer s: s i z e p: p a r t i c i p a t i o n A k where we c a l c u l a t e d VMP a c c o r d i n g t o e q u a t i o n (34) and S P A u s i n g e s t i m a t e d c o e f f i c i e n t s (a , a , /3 ). k k j k 1 27 For the measurement of t e c h n i c a l i n e f f i c i e n c y we compare the ex p e c t e d net r e t u r n of the f a c t o r s as p r e d i c t e d A by n(v) w i t h the a c t u a l net r e t u r n . We then t e s t i f the d i f f e r e n c e i s s y s t e m a t i c a l l y i n f l u e n c e d by the p a r t i c i p a t i o n c h a r a c t e r i s t i c of the f a r m e r s , by u s i n g t he dummy v a r i a b l e r e g r e s s i o n on the d i f f e r e n c e . T h i s method i s based on the A f a c t t h a t t he e s t i m a t e d n ( v ) i s an average p r o d u c t i o n f u n c t i o n (not a f r o n t i e r p r o d u c t i o n f u n c t i o n ) . The a s s e r t i o n t h a t p a r t - t i m e farms are t e c h n i c a l l y i n e f f i c i e n t , t h u s s y s t e m a t i c a l l y p r o d u c i n g l e s s o u t p u t w i t h t h e i r f a c t o r s than f u l l - t i m e farms produce from t h e i r f a c t o r s , s h o u l d mean A t h a t the e s t i m a t e d net r e t u r n n(v) i s s y s t e m a t i c a l l y above the a c t u a l net r e t u r n on p a r t - t i m e farms and s y s t e m a t i c a l l y below the a c t u a l net r e t u r n on f u l l - t i m e farms. . The dummy v a r i a b l e approach t e s t s whether the d i f f e r e n c e between a c t u a l and e s t i m a t e d net r e t u r n (n-n) i s s y s t e m a t i c a l l y much lower on p a r t - t i m e farms than on f u l l - t i m e farms of the same s i z e 2 " F. DATA The t h r e e s p e c i f i c a t i o n s a r e e s t i m a t e d w i t h the data d e s c r i b e d i n c h a p t e r t h r e e . The model uses d a t a on net revenue and f i v e f a m i l y s u p p l i e d f a c t o r s . The f i v e components of v a r e the f a m i l y s u p p l i e d f a c t o r s : 1) Paddy l a n d a r e a ( c u l t i v a t a b l e i n ha) 128 2) Dry l a n d a r e a ( c u l t i v a t a b l e i n ha) 3) F a m i l y male l a b o u r days a c t u a l l y used. The f a m i l i e s r e p o r t e d e i t h e r the days (counted as 10 h o u r s ) , h a l f days, or hours t h a t were spend on the farm p r o d u c t i o n 2 5 . There was no f u r t h e r i n f o r m a t i o n t h a t might have g i v e n us the p o s s i b i l i t y of d i s t i n g u i s h i n g i f the l a b o u r came from a m o b i l e f a m i l y member or an immobile f a m i l y member. Q u e s t i o n s about the c o n t r i b u t i o n of male l a b o u r t o value-added (the m a r g i n a l p r o d u c t ) i n comparison t o the o p p o r t u n i t y c o s t can t h u s o n l y b r o a d l y i n d i c a t e t h a t male l a b o u r i s m o b i l e (when m a r g i n a l p r o d u c t i v i t y i s c l o s e t o the wage), or t h a t i t i s g e n e r a l l y immobile. 4) F a m i l y female l a b o u r days. The f a m i l i e s r e p o r t e d the a c t u a l amounts of work t i m e , but i n the p r o c e s s i n g a c o n v e r s i o n r a t e of .8 was c o n s i s t e n t l y a p p l i e d t o make female l a b o u r e q u i v a l e n t t o male l a b o u r 2 6 . 5) D e f l a t e d t o t a l farm a s s e t s t o c k v a l u e . The d e f l a t o r used i s a F i s h e r p r i c e index which uses n a t i o n a l p r i c e d a t a w i t h a s s e t shares c a l c u l a t e d from the sample. The a s s e t s i n c l u d e d a r e : t o o l s and machines ( 3 7 % ) , farm i n v e n t o r y ( 2 8 % ) , l i v e s t o c k (21%) and t r e e s ( 1 4 % ) , a l l as r e p o r t e d on b a l a n c e sheet a t the b e g i n n i n g of the y e a r 2 7 . An a l t e r n a t i v e t o u s i n g s t o c k v a l u e s would be t o use the s e r v i c e f l o w . However, t h e r e was i n s u f f i c i e n t i n f o r m a t i o n t o attempt a r e a s o n a b l e c a l c u l a t i o n of the s e r v i c e f l o w f o r t h e s e Taiwanese a s s e t s 2 8 . Q u e s t i o n s 129 about the c o n t r i b u t i o n of c a p i t a l t o value-added i n t h i s study w i l l thus not so much be about the t e c h n i c a l c o n t r i b u t i o n of farm a s s e t s t o value-added, but about the c o n t r i b u t i o n of the c a p i t a l i n v e s t e d i n the farm a c t i v i t y t o the net farm r e t u r n 2 9 . The dependent v a r i a b l e i s the net revenue. I t i s the sum of a l l the c r o p and non-crop a c t u a l farm incomes from which a l l the p a i d c o s t s a r e d e d u c t e d 3 0 . T h i s net p r o f i t i s then d e f l a t e d by a F i s h e r p r i c e index based on n a t i o n a l p r i c e data and average s h a r e s of output and v a r i a b l e i n p u t s i n p r o f i t as c a l c u l a t e d from the t o t a l sample of 2274 o b s e r v a t i o n s . To d i s t i n g u i s h the consequences of t e c h n o l o g y and farmer b e h a v i o u r from the i n f l u e n c e s of v a r i a t i o n s i n s o i l and c l i m a t e , we s u b d i v i d e the sample i n t o groups of farms w i t h s i m i l a r e n v i r o n m e n t a l c o n d i t i o n s . Thus a l l - p a d d y farms ( d e s i g n a t e d a) are d i s t i n g u i s h e d from mixed paddy-dry l a n d farms ( d e s i g n a t e d b) and pure d r y - l a n d farms ( d e s i g n a t e d c ) . The sample i s a l s o s u b d i v i d e d a c c o r d i n g t o the r e g i o n s d e s c r i b e d i n c h a p t e r t h r e e : N o r t h R i c e (NR), M i d - R i c e (MR), South R i c e (SR) and Sugar (SUG) (t h u s MRb i n d i c a t e s the mixed paddy-dry farms of the M i d - r i c e r e g i o n ) . Each r e g i o n had s u f f i c i e n t o b s e r v a t i o n s f o r e s t i m a t i o n i n the a l l - p a d d y and the paddy-dry c a t e g o r y , but o n l y the Sugar r e g i o n had s u f f i c i e n t a l l - d r y farms. 1 30 G. THE STATISTICAL PROPERTIES OF THE MODELS We e s t i m a t e the l i n e a r , the l i n e a r dummy and the g e n e r a l i z e d l i n e a r model w i t h the o r d i n a r y l e a s t squares method. The model i s t h u s : (36) n = TI(v ) + e h: household h h h h Wit h the u s u a l o r d i n a r y l e a s t squares a s s u m p t i o n s : (a) E(e) = 0 (b) E [ e 2 ] = a2 (c) E[e e ] = 0 j , h : h o u s e h o l d s j h (d) the e x p l a n a t o r y v a r i a b l e s (v) are u n i f o r m l y bound by a f i n i t e c o n s t a n t |v | < 1/̂ (e) they a re a l s o d i s t r i b u t e d i n d e p e n d e n t l y of the e r r o r ( f ) and the rank of V i s f u l l : r=5 Assumptions (b) g e n e r a l l y mean t h a t we assume t h a t t h e r e i s no s y s t e m a t i c i n f l u e n c e on the v a r i a n c e of the e r r o r terms, thus no h e t e r o s k e d a s t i c i t y , w h i l e (c) means t h a t t h e r e i s no i n f l u e n c e from one farmer i n the sample t o the n e x t . Assumption (d) i s no problem s i n c e t h e r e a re d e f i n i t e bounds on the f a c t o r s t h a t any f a m i l y has a v a i l a b l e . 131 Assumption (e) i s l i k e l y t o be s a t i s f i e d i n t h i s s t u d y , as i t i s a value-added f u n c t i o n e s t i m a t i o n of the f a m i l y s u p p l i e d f a c t o r s of p r o d u c t i o n . U s i n g the argument of Hoch (1965) and Z e l l n e r , Kmenta, Dreze (1965), the e r r o r i n the a p o s t e r i o r i ( a c t u a l ) v a l u e - a d d e d i s i n d e p e n d e n t l y d i s t r i b u t e d from the f a m i l y i n p u t s ( e x p l a n a t o r y v a r i a b l e s ) , and i s l i n k e d t o random weather c o n d i t i o n s and o t h e r a g r i c u l t u r a l c o n d i t i o n s such as d i s e a s e and i n s e c t i n f l u e n c e s . I t s h o u l d a l s o be n o t e d t h a t i n our model, the a p o s t e r i o r i value-added can be n e g a t i v e even though t h e r e i s a p o s i t i v e use of f a m i l y f a c t o r s . These are c a s e s where both p a i d and f a m i l y s u p p l i e d f a c t o r s a r e m i s a l l o c a t e d g i v e n the a p o s t e r i o r i l e v e l s of output (or the l a c k of o u t p u t ) because of the random w e a t h e r - d i s e a s e i n f l u e n c e . We cannot e x c l u d e t h e s e o b s e r v a t i o n s because t h i s i s a genuine p a r t of the net revenue s i t u a t i o n f a c i n g f a r m e r s i n Taiwan. T h i s b r i n g s us t o the d i s c u s s i o n of the f i r s t a s sumption (a) t h a t E [ e ] = 0, so t h a t we a r e e s t i m a t i n g average (expected) r e l a t i o n s h i p between f a m i l y f a c t o r s and v a l u e - a d d e d , and not f r o n t i e r r e l a t i o n s h i p s . The l a t t e r would r e q u i r e t h a t a l l e r r o r s be of the same s i g n , s i n c e the e s t i m a t e d f u n c t i o n s h o u l d then g i v e the maximal p o s s i b l e v a l u e - a d d e d from the amounts of f a m i l y f a c t o r s . In our e s t i m a t i o n , we are m a i n t a i n i n g t h e assumption t h a t t h e r e are enough o b s e r v a t i o n s on e x t r a good, e x t r a bad and average w e a t h e r - d i s e a s e s i t u a t i o n s i n the sample, and t h a t t h e r e are 1 32 enough farmers a t a l l l e v e l s of t e c h n i c a l e f f i c i e n c y . The a c t u a l e s t i m a t e d f u n c t i o n i s thus the r e l a t i o n s h i p between f a m i l y f a c t o r s and the value-added they can produce g i v e n average w e a t h e r - d i s e a s e c o n d i t i o n s and a t average t e c h n i c a l e f f i c i e n c y l e v e l s of p r o d u c t i o n . We can i n f a c t i n v e s t i g a t e i f t h e r e a r e any c h a r a c t e r i s t i c s of the farmers which s y s t e m a t i c a l l y p u l l the a c t u a l v alue-added above or below the ex p e c t e d one, g i v e n the f a m i l y i n p u t s and the e s t i m a t e d value-added f u n c t i o n s . The year of p r o d u c t i o n i s a c a n d i d a t e f o r the i n v e s t i g a t i o n of the w e a t h e r - d i s e a s e i n f l u e n c e t o i d e n t i f y t he e x t r a good or e x t r a bad p r o d u c t i o n y e a r s . The degree of p a r t i c i p a t i o n i n farm p r o d u c t i o n can be used f o r the i n v e s t i g a t i o n of s y s t e m a t i c t e c h n i c a l e f f i c i e n c y d i f f e r e n c e s . Thus we a l s o a n a l y s e the s t r u c t u r e of the e s t i m a t e d e r r o r of p r o d u c t i o n w i t h a dummy v a r i a b l e model. ( T h i s i s i n f a c t our t e s t f o r t e c h n i c a l i n e f f i c i e n c y . ) A dummy v a r i a b l e model i s e s t i m a t e d on the e r r o r s of the v a l u e added f u n c t i o n A A e s t i m a t i o n s (n-n)=e: (37) e = a + La d + r? d, = 1972... 1980 dummy i O i i i i o r d 1 = p a r t i c i p a t i o n group dummy or d, = s i z e dummy We a r e thus m a i n t a i n i n g the h y p o t h e s i s t h a t the w e a t h e r - d i s e a s e c o n d i t i o n s and the t e c h n i c a l e f f i c i e n c y l e v e l s of p r o d u c t i o n are n e u t r a l t o the a l l o c a t i v e p r o p e r t i e s of the p r o d u c t i o n s i t u a t i o n w i t h r e s p e c t t o the 133 f a m i l y s u p p l i e d i n p u t s ( i s o q u a n t s are s h i f t e d p a r a l l e l t o the p o s i t i o n of the average i s o q u a n t ) . Note t h a t t h i s i s a ve r y h e u r i s t i c approach t o the t e c h n i c a l i n e f f i c i e n c y measurement s i n c e the s t a t i s t i c a l p r o p e r t i e s of t h i s dummy r e g r e s s i o n on the e s t i m a t e d e r r o r s a r e unknown. The a l l o c a t i v e e f f i c i e n c y i s i n v e s t i g a t e d v i a a dummy r e g r e s s i o n on the e s t i m a t e d m a r g i n a l p r o d u c t i v i t i e s a c c o r d i n g t o e q u a t i o n (34) and ( 3 5 ) ; a g a i n the s t a t i s t i c a l p r o p e r t i e s of t h i s dummy v a r i a b l e r e g r e s s i o n a r e unknown. H. ESTIMATION RESULTS H. 1 I n t r o d u c t i o n B e f o r e a d d r e s s i n g the e f f i c i e n c y i s s u e s which a r e the main concern i n t h i s s t u d y , the s a l i e n t e c o n o m e t r i c r e s u l t s a r e re v i e w e d . C o e f f i c i e n t s f o r the ' l i n e a r dummy model' a re shown i n t a b l e E.15-18, t e s t s t a t i s t i c s i n t a b l e E.5-6, and the r e s u l t a n t m a r g i n a l p r o d u c t s of the f a m i l y s u p p l i e d i n p u t s f o r s m a l l f u l l - t i m e , s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms i n t a b l e 5.7. G e n e r a l l y the s t a t i s t i c a l f i t was good (R 2 a t l e a s t .86). For the M i d - r i c e mixed paddy-dry farms (MRb) and the Sugar a l l - p a d d y (SUGa) farms the h y p o t h e s i s t h a t t h e s i z e and p a r t i c i p a t i o n dummy c o e f f i c i e n t s a r e ze r o i s not r e j e c t e d ( s i g n i f i c a n c e .05). In thes e c a s e s the l i n e a r f u n c t i o n i s a p p r o p r i a t e and m a r g i n a l p r o d u c t i v i t i e s 1 34 of t h e f a c t o r s a r e c o n s t a n t s ( i s o q u a n t s a r e l i n e a r ) . On the NRa, MRa and SUGc farms, s i z e and p a r t i c i p a t i o n dummy c o e f f i c i e n t s are s i g n i f i c a n t , on the SRa and SRb farms t h e r e a r e o n l y s i z e e f f e c t s w h i l e on the SUGb farms t h e r e a r e o n l y p a r t i c i p a t i o n e f f e c t s ( t a b l e E.15-18). Note t h a t the s t a t i s t i c a l f i t of the ' l i n e a r ' f u n c t i o n i s h i g h (R 2 a t l e a s t .81) even though i n most cases the ' l i n e a r dummy* f u n c t i o n f i t s the da t a s i g n i f i c a n t l y b e t t e r . C o e f f i c i e n t s of the ' g e n e r a l i z e d l i n e a r model' a re shown i n t a b l e E.8, t e s t s t a t i s t i c s i n t a b l e E.1-2, the s i z e - p a r t i c i p a t i o n dummy v a r i a b l e r e g r e s s i o n s on the c a l c u l a t e d m a r g i n a l p r o d u c t s i n t a b l e E.19-22 and the r e s u l t a n t m a r g i n a l p r o d u c t s of f a m i l y f a c t o r s f o r s m a l l f u l l - t i m e , s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms i n t a b l e 5.6. G e n e r a l l y the s t a t i s t i c a l f i t was good (R 2 a t l e a s t . 83). As can be seen i n t a b l e E.2, the h y p o t h e s i s of the l i n e a r f u n c t i o n i s not r e j e c t e d a t s i g n i f i c a n c e l e v e l s of .05 f o r the NRa, MRb and SUGa farms. (The MRb, SUGa c a s e s agree w i t h the c o n c l u s i o n of the ' l i n e a r dummy' model.) For the o t h e r r e g i o n s the c o n s t a n t r e t u r n s t o s c a l e g e n e r a l i z e d l i n e a r model f i t s the d a t a much b e t t e r than the l i n e a r model. Only i n the SRa farms i s the non-homothetic g e n e r a l i z e d l i n e a r model s i g n i f i c a n t l y b e t t e r than the c o n s t a n t r e t u r n s t o s c a l e model. 1 35 There i s one d i f f i c u l t y w i t h the e s t i m a t e d g e n e r a l i z e d l i n e a r f u n c t i o n s : they do not s a t i s f y the r e g u l a r i t y c o n d i t i o n of n e o - c l a s s i c a l v a l u e - a d d e d f u n c t i o n s R e t u r n i n g t o system ( 2 6 ) - ( 2 8 ) , the second o r d e r c o n d i t i o n s f o r m a x i m i z a t i o n of the p r o d u c t i o n from the a g r i c u l t u r a l r e s o u r c e s , r e q u i r e the bordered H e s s i a n t o be n e g a t i v e d e f i n i t e or G(v) t o be q u a s i - c o n c a v e or concave. I f we r e w r i t e system (26) by i n c o r p o r a t i n g the r e s o u r c e c o n s t r a i n t s : H-1 h H-1 h (38) Max Z G(v ) + G(V - Z v ) h=1 h=1 H-1 h H-1 h = Max Z G(v ) + G(z) where: z=V-Z v h=1. h=1 then the f i r s t o r d e r c o n d i t i o n s a r e : h h (39) 9G(v )/9v - 9G(z)/9z = 0 V i = 1..5 f a c t o r s i i i V h,k=1..H-1 households k k 9G(v )/9v - 9G(z)/9z = 0 V i i i i and the second o r d e r c o n d i t i o n s r e q u i r e the [5(H-1)x5(H-1)] h h k k H e s s i a n a s s o c i a t e d w i t h the v e c t o r [dv ,dv ,dv ,dv ] i j i j Vh,k=1..H-1 and V i , j = 1 . . 5 , must be n e g a t i v e d e f i n i t e where (39) h o l d s : 136 (40) r h h h -, 3G(v )/3v 3v + 3G(z)/3z 3z 3G(z)/3z 3z i j i j i j k k k 3G(z)/3z 3z 3G(v )/3v 3v + 3G(z)/3z 3z L i j i j i J J which i m p l i e s t h a t the d i a g o n a l elements must not be p o s i t i v e : h h h (41) 3G(v )/3v 3v + 3G(z)/3z 3z < 0 i i i i T h i s f u r t h e r i m p l i e s t h a t h h h (42) 3G(v )/3v 3v < 0 i i s i n c e (41) has t o h o l d f o r any households chosen as the H-the h o u s e h o l d . The e v i d e n c e f o r a l l n i n e samples and f o r both the ' g e n e r a l i z e d l i n e a r ' and ' l i n e a r dummy' f u n c t i o n s on the v a l u e s of the change i n the m a r g i n a l p r o d u c t s of each f a c t o r w i t h r e s p e c t t o an a d d i t i o n of t h a t f a c t o r i s t h a t (42) does not h o l d f o r a l l f a c t o r s . A s u f f i c i e n t c o n d i t i o n f o r the ' g e n e r a l i z e d l i n e a r ' f u n c t i o n t o s a t i s f y (42) i s t h a t the m a t r i x of c o e f f i c i e n t s , as r e p o r t e d i n t a b l e E.8-9, would have a l l i t s o f f - d i a g o n a l elements (a ) n o n - n e g a t i v e . T h i s i j i s not the case i n our e s t i m a t e d f u n c t i o n s . In a l l n i n e c a ses t h e r e i s a s t r o n g n e g a t i v e c o e f f i c i e n t f o r the female-paddy term ( f e m a l e - d r y term i n Sugc). Added t o t h i s i s a n e g a t i v e c o e f f i c i e n t f o r the paddy-asset term on the 1 37 a l l - p a d d y ( a l l - d r y ) farms (except i n SRa) and a n e g a t i v e paddy-male term on the paddy-dry farms (and SRa c a s e ) . These e f f e c t s dominate the f u n c t i o n s and the shadow p r i c e s h i f t s . The r e s u l t i s t h a t the H e s s i a n m a t r i c e s of second orde r d e r i v a t i v e s of the e s t i m a t e d f u n c t i o n s (when e v a l u a t e d a t the i n p u t l e v e l s which a re used by the households) a r e not n e g a t i v e d e f i n i t e f o r most households and on average, s i n c e the d i a g o n a l elements a re not a l l n e g a t i v e 3 1 . Thus 9G(v)/9v 9v >0 f o r a t l e a s t one f a c t o r f o r most households i j i n the g e n e r a l i z e d l i n e a r model. However, the ' g e n e r a l i z e d l i n e a r ' model produces p a t t e r n s of s h i f t s of the shadow p r i c e s which g e n e r a l l y a re not c o n t r a d i c t e d by the d i r e c t i o n of the s h i f t s of the shadow p r i c e s i n the ' l i n e a r dummy' model, as can be seen by comparing the s i g n p a t t e r n s i n t a b l e s E.19-22 and t a b l e s E.15-18. The ' l i n e a r dummy' s p e c i f i c a t i o n i s v e r y f l e x i b l e and does not impose many a p r i o r i r e s t r i c t i o n s on the v a l u e added f u n c t i o n s . T h i s s p e c i f i c a t i o n i s the same as an e s t i m a t i o n f i r s t l y , of a sim p l e l i n e a r a p p r o x i m a t i o n of the v a l u e added f u n c t i o n f o r each farm t y p e , and t h e n , a comparison of the r e l a t i v e p o s i t i o n s of the r e s u l t a n t shadow p r i c e s of the p r o d u c t i o n f a c t o r s between the farm t y p e s . Both the ' g e n e r a l i z e d l i n e a r ' and ' l i n e a r dummy' approaches c o n f i r m each o t h e r so t h a t t h i s s u g g e s t s t h a t the shadow p r i c e p a t t e r n s a r e not a consequence of the c h o i c e of the f l e x i b l e f u n c t i o n a l form (e.g. t h e g e n e r a l i z e d l i n e a r as a g a i n s t the t r a n s l o g or 1 38 g e n e r a l i z e d l e o n t i e f or another f l e x i b l e f u n c t i o n ) . I t s h o u l d be noted t h a t the i s s u e of r e t u r n s t o s c a l e i s n e u t r a l t o the c u r v a t u r e problem of the e s t i m a t e d f u n c t i o n s as a l l the f a c t o r s a r e expanded p r o p o r t i o n a l l y when s c a l e e f f e c t s a r e c o n s i d e r e d . The i s s u e of the r e g u l a r i t y v i o l a t i o n i n the e s t i m a t e d f u n c t i o n s w i l l be c o n s i d e r e d f u r t h e r when a l l o c a t i v e e f f i c i e n c y i s d i s c u s s e d . The next t h r e e s e c t i o n s a r e a d i s c u s s i o n of the r e s u l t s of the ' g e n e r a l i z e d l i n e a r ' and the ' l i n e a r ' models as they bear on the i s s u e s of r e t u r n s t o s c a l e , of a l l o c a t i v e e f f i c i e n c y and of t e c h n i c a l e f f i c i e n c y . The ' l i n e a r ' model i s a r e s t r i c t e d v e r s i o n of the ' g e n e r a l i z e d l i n e a r ' model where e s s e n t i a l l y e q u a l i t y a c r o s s farms of the shadow p r i c e s i s imposed (.these r e s t r i c t i o n s a r e '. s t a t i s t i c a l l y a c c e p t a b l e i n the NRa, MRb and SUGa c a s e s ) . A l t e r n a t i v e l y i n t e r p r e t e d , the f i x e d shadow p r i c e s as d e r i v e d from the ' l i n e a r ' model can be c o n s i d e r e d as an average of the ' l i n e a r dummy' model shadow p r i c e s which i s then compared t o the average as c a l c u l a t e d i n the ' g e n e r a l i z e d l i n e a r ' model. H.2 R e t u r n s t o s c a l e The h y p o t h e s i s of c o n s t a n t r e t u r n s t o s c a l e can be t e s t e d d i r e c t l y i n the ' g e n e r a l i z e d l i n e a r ' model. The h y p o t h e s i s can be a c c e p t e d i n a l l the c a s e s , except the SRa case where the t e c h n o l o g y i s n o n - h o m o t h e t i c 3 2 . (Test 1 39 s t a t i s t i c s a r e r e p o r t e d i n t a b l e E . 1 . ) The h y p o t h e s i s of c o n s t a n t r e t u r n s t o s c a l e cannot be t e s t e d d i r e c t l y i n the ' l i n e a r ' model. In t h i s case we have t o b u i l d an a p p r o x i m a t i v e t e s t , as o u t l i n e d i n s e c t i o n E . 1 . The h y p o t h e s i s can be a c c e p t e d i n a l l c a s e s , e xcept the SRa ease, as average e r r o r ( n - n ) on s m a l l f u l l - t i m e farms i s g e n e r a l l y e q u a l or even l a r g e r than on l a r g e f u l l - t i m e farms. Only i n the SRa r e g i o n i s t h e r e a s i g n i f i c a n t o v e r e s t i m a t i o n of the a c t u a l net r e t u r n on s m a l l f u l l - t i m e farms w i t h the e s t i m a t e d l i n e a r f u n c t i o n . Thus the d i r e c t t e s t of c o n s t a n t r e t u r n s t o s c a l e i n the ' g e n e r a l i z e d l i n e a r ' model produces the same c o n c l u s i o n as the approximate t e s t i n the ' l i n e a r ' model. The assumption of i n c r e a s i n g r e t u r n s t o s c a l e can be r e j e c t e d i n a l l c a s e s , except the SRa c a s e . T h i s means t h a t the o p t i m a l s i z e of the farm need not be l a r g e and a system of s m a l l farms i s e q u a l l y e f f i c i e n t from a r e t u r n s t o s c a l e p e r s p e c t i v e . H.3 A l l o c a t i v e e f f i c i e n c y In t h i s s e c t i o n a l l o c a t i v e e f f i c i e n c y i s f i r s t i n v e s t i g a t e d a g a i n s t the o p p o r t u n i t y c o s t s and then a c r o s s farm g r o u p s . The f i r s t s u p p l i e s i n f o r m a t i o n on the o v e r a l l a l l o c a t i v e e f f i c i e n c y of t h e farms i n each r e g i o n and farm l a n d t y p e and the g e n e r a l w o r k i n g of the market system. The second i n v e s t i g a t e s the f a c t o r p r o d u c t i v i t i e s a c r o s s the 1 40 T a b l e 5.1: SHADOW PRICES (NT$) FOR LABOUR 1 (FARMS WITH GOOD OFF-FARM EMPOYMENT OPPORTUNITIES) NRa + NRb MRa SRa* L Male 270 214 292 347 (28) (48) (32) (na) L Female 1 53 101 222 1 84 (54) (109) (40) (na) GL Male 271 1 94 299 183 (4) (29) (22) (66) GL Female 1 72 200 1 78 227 (39) (54) (50) (84) Notes C a l c u l a t e d l a b o u r p r o d u c t i v i t y which can be compared to the average n a t i o n a l farm wage: Male 275, Female 249 NT$ L: L i n e a r model a: a l l paddy farms GL: G e n e r a l i z e d l i n e a r model b: paddy-dry farms +: L i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) Non c o n s t a n t r e t u r n s t o s c a l e GL model, and L i n e a r s i z e dummy model i n s t e a d of L model ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) farm groups and r e q u i r e s an i n t e r p r e t a t i o n of the shape of the e s t i m a t e d f u n c t i o n s and i t s p o s s i b l e cause. F i r s t the r e s u l t s of the ' l i n e a r ' model a r e compared w i t h the average shadow p r i c e s d e r i v e d from the ' g e n e r a l i z e d l i n e a r ' model and w i t h the market p r i c e s as r e p o r t e d i n t a b l e s 5.1-5. The shadow p r i c e s of the f a m i l y s u p p l i e d f a c t o r s a r e t h e c o e f f i c i e n t s of the ' l i n e a r ' f u n c t i o n . To f i n d the shadow p r i c e s i n the ' g e n e r a l i z e d l i n e a r ' model, the f i r s t o r d e r d e r i v a t i v e s of the f u n c t i o n a r e c a l c u l a t e d 141 f o r each farmer's l e v e l of i n p u t s and then averaged over the sample. The market p r i c e s a r e c a l c u l a t e d as the a v e r a g e s , over 9 sample y e a r s , of the market p r i c e s which were d e f l a t e d w i t h the p r o f i t i n d e x 3 3 . The s t a n d a r d d e v i a t i o n s r e p o r t e d a r e f o r the ' l i n e a r ' model the s t a n d a r d d e v i a t i o n of the l i n e a r f u n c t i o n c o e f f i c i e n t s and f o r the ' g e n e r a l i z e d l i n e a r ' model, the s t a n d a r d d e v i a t i o n s of the base c o e f f i c i e n t i n each dummy r e g r e s s i o n of the c a l c u l a t e d s h a d o w p r i c e 3 " . Comparisons of the shadow p r i c e s w i t h the market p r i c e s a r e t e s t s f o r a l l o c a t i v e e f f i c i e n t b e h a v i o u r by the farmers i n the c h o i c e of the f a m i l y f a c t o r and so i n d i c a t e i f the f a m i l y f a c t o r s a r e m o b i l e . F i r s t l a b o u r i s c o n s i d e r e d then farm a s s e t s , then l a n d . When farmers have good o p p o r t u n i t i e s f o r o f f - f a r m employment, e s t i m a t e d m a r g i n a l p r o d u c t s of l a b o u r a r e s i m i l a r t o the n a t i o n a l wages. Farms i n the NRa and NRb r e g i o n s a r e c l o s e t o T a i p e i and K e e l u n g ; farms i n SRa are c l o s e t o Ka o h s i u n g , and farms i n MRa are i n an a r e a w i t h much r u r a l i n d u s t r y . T able 5.1 shows t h a t m a r g i n a l p r o d u c t s a r e s i m i l a r t o the average n a t i o n a l farm wage of 275 f o r men and 249 NT$ f o r women 3 5. The o t h e r farms a r e f u r t h e r from i n d u s t r i a l employment, u s u a l l y because they a r e f u r t h e r i n the h i l l s . T a b l e 5.2 shows t h e i r l a b o u r m a r g i n a l p r o d u c t s . The v a l u e s a r e e r r a t i c and u s u a l l y l e s s t h a n t h e n a t i o n a l farm wage. 1 42 T a b l e 5.2: SHADOW PRICES (NT$) FOR LABOUR 2 (FARMS WITH POOR OFF-FARM EMPLOYMENT OPPORTUNITIES) MRb + SRb SUGa + SUGb SUGc L Male 141 79 81 1 44 236 (41) (51 ) (50) (43) (83) L Female 31 181 2 85 -33 (61 ) (61 ) (58) (47) (79) GL Male 222 96 1 39 141 1 98 (54) (25) (83) (14) (57) GL Female -20 1 46 -3 i 11 -129 (53) (17) (28) (32) (105) Notes: C a l c u l a t e d l a b o u r p r o d u c t i v i t y which can be compared t o the average n a t i o n a l farm wage: Male 275, Female 249 NT$ L: L i n e a r model a: a l l paddy farms GL: G e n e r a l i z e d l i n e a r ' m o d e l b: paddy dry farms c: a l l dry farms +: l i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) The male shadow p r i c e i s g e n e r a l l y h i g h e r than the female shadow p r i c e . T h i s r e s u l t may i n d i c a t e more m o b i l i t y f o r males. T a b l e 5.3 shows the shadow p r i c e s f o r a s s e t s . G i v e n the c o n s t r u c t i o n of the a s s e t v a r i a b l e , the shadow p r i c e ought t o e q u a l the i n t e r e s t r a t e p l u s the d e p r e c i a t i o n r a t e i f the farmer has chosen the p r o f i t m a x i m i z i n g q u a n t i t y of c a p i t a l . The o f f i c i a l a g r i c u l t u r a l i n t e r e s t r a t e was 18.9%, the market r a t e 4 0 . 8 % 3 6 , and the shadow p r i c e of the a s s e t s s h o u l d a t l e a s t cover the c a p i t a l c o s t (assuming t h a t a p p r e c i a t i o n i s not l a r g e r than d e p r e c i a t i o n 3 7 ) . The shadow 143 T a b l e 5.3: SHADOW PRICES (%) FOR FARM ASSETS Dominant farm f o r the r e g i o n NRa + MRa SRa+- SUGb L 34.6 10.3 26. 1 26.8 (3) (3) (na) (5) GL 29.5 -1.5 35.6 28.5 (3) (6) (6) (4) Non-dominant farm f o r the r e g i o n NRb MRb* SRb SUGa + SUGc L 17.9 23.9 51 .6 59. 1 41.7 (4) (5) (6) (4) (10) GL 40.0 44.5 44.9 61 .9 74.7 (8) (8) (4) (4) (16) Notes: C a l c u l a t e d r a t e of r e t u r n on farm a s s e t s which can be compared t o the 1 8 . 9 % average o f f i c i a l a g r i c u l t u r a l i n t e r e s t r a t e or the 40 . 8 % average n a t i o n a l market i n t e r e s t r a t e i f no d e p r e c i a t i o n i s assumed L: L i n e a r model a: a l l Paddy farms GL: G e n e r a l i z e l i n e a r model b: Paddy-dry farms c: a l l - d r y farms +: L i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) t-: Non c o n s t a n t r e t u r n s t o s c a l e GL model, and L i n e a r s i z e dummy model i n s t e a d of L model ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) p r i c e s a r e hal f w a y between the o f f i c i a l and the market c a p i t a l c o s t on the dominant l a n d type farm f o r each r e g i o n ( a l l - p a d d y i n the r i c e r e g i o n s , mixed dry-paddy i n the Sugar r e g i o n ) . Presumably, the a g r i c u l t u r a l a u t h o r i t i e s devote most a t t e n t i o n t o the s e farms and t h e r e i s some ev i d e n c e t h a t , as a r e s u l t , t h e s e farms have b e t t e r a c c e s s t o the o f f i c i a l a g r i c u l t u r a l c a p i t a l m a rkets. The shadow p r i c e s on the non-dominant l a n d type farms a r e a t or above the market 1 44 Ta b l e 5.4: SHADOW PRICES (NT$) FOR PADDY LAND NRa + MRa SRa* SUGa + L 1 4656 41 1 29 1 7354 47866 (5199) (5858) (na) (6747) GL 13181 44953 35609 46948 (3765) (9150) (9493) (3626) NRb MRb* SRb SUGb L 28183 76407 56758 52257 (8702) (9441) (8379) (6315) GL 5143 461 72 36566 54905 (7292) (11846) ( 10420) (2228) Notes: C a l c u l a t e d r e n t a l r a t e f o r l a n d which can be compared t o the average o f f i c i a l r e n t a l r a t e f o r l a n d of 16634 NT$ L: L i n e a r model a: a l l paddy farms GL: G e n e r a l i z e d l i n e a r model b: paddy-dry farms +: L i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) t-: Non c o n s t a n t r e t u r n s t o s c a l e GL model, and L i n e a r s i z e dummy model i n s t e a d of L model ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) c a p i t a l c o s t i n d i c a t i n g l e s s a c c e s s t o the o f f i c i a l c a p i t a l markets. T a b l e s 5.4 and 5.5 show the shadow p r i c e s of paddy l a n d and dry l a n d . Except f o r d ry l a n d i n the r i c e r e g i o n s , and f o r the NR r e g i o n , they exceed the o f f i c i a l r e n t a l r a t e of NT$ 16634. For t h i s reason r e n t i n g does not o c c u r . W i t h i n each r e g i o n , paddy l a n d shadow p r i c e s a r e e q u a l on the two l a n d type farms, showing the r o b u s t n e s s of the paddy 1 45 Ta b l e 5.5: SHADOW PRICES (NT$) FOR DRY LAND NRb MRb + SRb SUGb SUGc L 7096 10241 9297 36942 40936 (9199) (10332) (12844) (6179) (10125) GL -63652 -3372 -35978 59760 21785 (19571) (8510) (18445) (4214) (7820) Notes: no average o f f i c i a l r e n t a l r a t e i s a v a i l a b l e f o r dry l a n d L: L i n e a r model b: paddy-dry farms GL: G e n e r a l i z e l i n e a r model c: a l l dry farms +: L i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) l a n d shadow p r i c e i n each r e g i o n . Dry l a n d i s farmed i n the r i c e r e g i o n s , even though i t has a n e g a t i v e r e t u r n , s i n c e l o n g f a l l o w p e r i o d s a re l i m i t e d by law and s i n c e the farmers hope t o s e l l i t e v e n t u a l l y f o r n o n - a g r i c u l t u r a l u s e s . Only i n the Sugar r e g i o n does d r y l a n d have a h i g h shadow p r i c e because i t i s devoted t o a use f o r which i t i s w e l l s u i t e d (dry l a n d p r o d u c t i o n methods a r e w e l l e s t a b l i s h e d ) . H a ving thus d i s c u s s e d the a l l o c a t i v e e f f i c i e n c y i s s u e a g a i n s t the market p r i c e s , we now d i s c u s s the i s s u e of the d i f f e r e n c e s t h a t the s i z e and p a r t i c i p a t i o n c h a r a c t e r i s t i c may make f o r the shadow p r i c e s of the f a m i l y f a c t o r s . Thus t a b l e s 5.6-7 show the shadow p r i c e s of the f a m i l y f a c t o r s of the s m a l l f u l l - t i m e , l a r g e f u l l - t i m e and 1 46 s m a l l p a r t - t i m e farms as c a l c u l a t e d . For the ' g e n e r a l i z e d l i n e a r ' model, t a b l e 5.6 i s based on t a b l e s E. 1 9-22, ( s t a n d a r d d e v i a t i o n s of the l a r g e f u l l - t i m e farm c o e f f i c i e n t ) . ( T a ble 5.8 c o n t a i n s the da t a f o r the a l l - d r y farms of the Sugar r e g i o n . Because t h e r e were not enough o b s e r v a t i o n on l a r g e f u l l - t i m e farms i n the sample, the base group i s the farms w i t h more than 1 h e c t a r e . ) For the ' l i n e a r dummy' m o d e l 3 8 , t a b l e 5.7 i s based on the s i z e - p a r t i c i p a t i o n dummy case i n t a b l e s E.15-18 ( s t a n d a r d d e v i a t i o n of the l a r g e f u l l - t i m e farm c o e f f i c i e n t ) . (The same i n f o r m a t i o n as i n t a b l e s 5.1-7 can be found i n an arrangement by r e g i o n i n the appendix t a b l e s E.23-26.) In t h i s i n v e s t i g a t i o n of the e f f e c t s of the farmer s ' c h a r a c t e r i s t i c s we have t o come t o an u n d e r s t a n d i n g of the i m p l i c a t i o n s of the c u r v a t u r e p r o p e r t i e s of the f u n c t i o n s , which w i l l be d i s c u s s e d a f t e r a g e n e r a l overview of the shadow p r i c e s h i f t s . F i r s t the male l a b o u r , then the farm a s s e t s , the paddy l a n d and f i n a l l y t he female l a b o u r shadow p r i c e s a r e p r e s e n t e d f o r the farm groups. Male shadow p r i c e s a c r o s s farm t y p e s t e n d t o be i n s i g n i f i c a n t l y d i f f e r e n t from each o t h e r (except i n SRa). In f a c t a g e n e r a l i z e d l i n e a r model w i t h the male shadow p r i c e h e l d c o n s t a n t 3 9 u s u a l l y does not mean a s i g n i f i c a n t l o s s of f i t a g a i n s t the u n r e s t r i c t e d model and t h i s r e s t r i c t e d model produces almost no changes i n the shadow p r i c e s of the o t h e r f a c t o r s . Thus the male shadow p r i c e i s c o n s t a n t a c r o s s farm t y p e s " 0 . 1 47 There i s a g e n e r a l tendency f o r a s s e t shadow p r i c e s t o be s t a b l e a c r o s s the farm groups i n the Sugar r e g i o n (SUGa, SUGb). In the r i c e r e g i o n , the a s s e t p r i c e on s m a l l f u l l - t i m e farms are g e n e r a l l y h i g h e r than on both o t h e r farms and at or above the market o p p o r t u n i t y p r i c e f o r farm c a p i t a l (40.8%) (except MRa, NRb) and a t the o f f i c i a l a g r i c u l t u r a l c a p i t a l c o s t (18.9%) on s m a l l p a r t - t i m e farms. In s i x c a s e s , the paddy l a n d shadow p r i c e s of l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms tend t o be s i m i l a r , e q u a l on both a l l - p a d d y and paddy-dry farms of the same r e g i o n , and, except f o r the NR r e g i o n , f a r above the o f f i c i a l r e n t a l r a t e . The e q u a l i t y of the shadow p r i c e s i s the reason why t h e r e i s no r e n t i n g of l a n d between s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms. I t a l s o shows, even i f a r e n t a l market were opened, t h a t l a n d would not be t r a n s f e r r e d from s m a l l p a r t - t i m e t o l a r g e f u l l - t i m e farms. I n t h e two other' c ases (NRb, SRa) the shadow p r i c e of paddy l a n d on s m a l l p a r t - t i m e and s m a l l f u l l - t i m e farms a r e e q u a l . A g a i n , s m a l l p a r t - t i m e farms do not have an i n c e n t i v e t o r e n t out l a n d t o f u l l - t i m e farms. There i s however a g e n e r a l tendency f o r paddy l a n d shadow p r i c e s t o be s i g n i f i c a n t l y lower on s m a l l f u l l - t i m e farms b r i n g i n g the shadow p r i c e on s m a l l f u l l - t i m e farms c l o s e t o the o f f i c i a l l a n d r e n t a l r a t e i n the r i c e r e g i o n s ( e xcept i n NRb and MRb" 1). Table 5.6: ESTIMATED SHADOW PRICES i n the GENERALIZED LINEAR MODEL i n f o u r r e g i o n s f o r SMALL FULL-TIME ( S F T ) . LARGE FULL-TIME (LFT) and SMALL PART-TIME (SPT) FARMS Reg i on 1 N o r t h R i c e I Mid r i ce South R i c e I Sugar Farm group | SFT LFT SPT | SFT LFT SPT SFT LFT SPT | SFT LFT SPT ALL-PADDY FARMS NRa + I MRa SRa* I SUGa + PADDY LAND 5055* 22506" (3765) 19229 21546* 45503" (9150) 56443 13791* 51651" (9493) 55031 33551* 51332" (3626) 49004 MALE LAB 2 70* 281 " (4) 272* 306 266" (22) 308* 326* 562" (66) -77* -5* 78 (83) 236* FEM LAB 130 100" (39) 181* 263 182" (50) 77* 316* -396" (84) 499* 168* 6" (28) -79* F ASSETS 41.1* 21.4" (3) 22.2 10.0 .4 (6) -8 . 2 48.5 51.6" (6) 17.0* 60. 9 58 .0" (4) 60.4 PADDY-DRY FARMS NRb • MRb + SRb SUGb PADDY LAND -7986* 22622" (7292) -9265* -4860* 68131 " ( 1 1846) 61207 23470* 69052" (10420) 19308* 43108* 53424" (2228) 61131* DRY LAND 2836 -23319" ( 19571 ) -1 17844* -32706* -1872 (8510) 9167 -70185 -47565" (18445) 1 1007* 77107* 59050" (4214) 59659 MALE LAB 283* 86" (29) 83 171 150" (54) 352* 35 70" (25) 97 189 107" ( 14) 129 FEM LAB 278 378" (54) 104* 169* -112" (53) -62 197* 85" (17) 156* 9* 116" (32) 132 F ASSETS 16 . 2 24.5 " (8) 59. 1* . 75.6* 40. 2" (8) 22 . 3* 60.6* 38.6" (4) 40. 7 28 . 1 28.8" (4) 27 .4 Source: t a b l e E. 19-22 Notes: * : s i g n i f i c a n t l y d i f f e r e n t from the l a r g e farmer group " s i g n i f i c a n t l y d i f f e r e n t from z e r o + : L i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) $ : Non c o n s t a n t r e t u r n s to s c a l e model ( s t a n d a r d d e v i a t i o n of base c o e f f i c i e n t i n the dummy r e g r e s s i o n used f o r the c o n f i d e n c e i n t e r v a l ) P M A paddy land , male l a b o u r farm a s s e t s o f f i c i a l r e n t a l r a t e : 16634 NT$ D : d r y la n d average wage: 275 NT$ F : female labour bank-market i n t e r e s t : 18.9-40.8% na average wage: 249 NT$ T a b l e 5:7: ESTIMATED SHADOW PRICES i n the LINEAR SIZE-PARTICIPATION DUMMY MODEL i n f o u r r e g i o n s f o r SMALL FULL-TIME (SFT), LARGE FULL-TIME (LFT) and SMALL PART-TIME (SPT) FARMS Region 1 N o r t h R i c e I Mid r i c e I South R i c e I Sugar Farm group SFT LFT SPT SFT LFT SPT | SFT LFT SPT SFT LFT SPT ALL-PADDY FARMS NRa MRa I SRa SUGa + PADDY LAND -21697 -17450 ( 1 1887) -10093 9064* 49224" (16290) 47691 6208 23506 ( 16581 ) 32246 56564 47015" ( 17311) 80992 MALE LAB 387 442" (88) 279 346 235 (82) 369 404* 833 (85) 318* -69 134 (126) -162 FEM LAB 1 16* 656" (200) 338 253* 40 (99) 108 185 -426 (226) 41 105 -122 (153) -16 F ASSETS 65.4* 42.5" (5) 42.7 48 . 1 * 24 .0" (24) . 3* 21.5 37 . 3" (16) . 32.7 101 . 1 76 .0" (20) 44 .O PADDY-DRY FARMS NRb MRb + SRb SUGb PADDY LAND 39301 -9700 ( 19532) 88877* 33761 66065 (37037) 75887 66200 1 13052" ( 15742) 69129 53635 63533" (10280) 53878 DRY LAND 45595 14964 ( 18746) 91252* -30157 -39107 (32284) 56715 -54443 7178 (24498) -69545 67615 60356" (9228) 58900 MALE LAB 178 229 ( 125) -439 194 276" (92) - 184* 351* -73 ( 128) 414* 124 68 (98) -329* FEM LAB 212 613" (216) 834 117 99 ( 162) 76 16 -274 (222) 246 57 88 (79) 409* F ASSETS -45. 1* 11.6 (5) -12.1* 52.7 16.5 (24) 35.2 18.6 51.4 ( 16) 21.5 31.6 19.8" (8) -12.7 Source: t a b l e E.15-18 Notes: * : s i g n i f i c a n t l y d i f f e r e n t from the l a r g e farmer group " : s i g n i f i c a n t l y d i f f e r e n t from z e r o + : L i n e a r model cannot be r e j e c t e d ( s i g n i f i c a n c e .05) ( s t a n d a r d d e v i a t i o n of the base c o e f f i c i e n t , used f o r the c o n f i d e n c e i n t e r v a l ) P : paddy l a n d o f f i c i a l r e n t a l r a t e : 16634 NT$ D : dry la n d na ^ M : male l a b o u r average wage: 275 NT$ F : female labour average wage: 249 NT$ uo A : farm a s s e t s bank-market i n t e r e s t : 18.9-40.8% 1 50 Tab l e 5.8: SHADOW PRICES f o r the SUGAR ALL-DRY FARMS i n the GENERALIZED LINEAR and LINEAR DUMMY MODEL MODEL: GENERALIZED LINEAR SIZE-PARTICIPATION DUMMY SFT M+LFT SPT SFT M+LFT SPT DRY LAND -25695* 9454 (7820) 54019* 571 1 0 -7643 (na) 1 12245 MALE 432 305" (57) -41 * • -4.9 450" (na) 63 FEMALE -76 -68 (105) -203* -89 -91 " (na) 1 7 F ASSETS 99.4* 69. 1" (16) 58.5 58.4 92.1" (na) -44.2 S ource: t a b l e s E.15-22 Notes: The base farm group i s t he farms over 1 h e c t a r e ( i n s t e a d the u s u a l farms over 2 h e c t a r e ) because t h e r e were not enough l a r g e f u l l - t i m e farms i n the sample. G e n e r a l l y , the whole sample may be too s m a l l (91 o b s e r v a t i o n s ) t o g i v e r e a s o n a b l e e s t i m a t e s of the s h i f t c o e f f i c i e n t s ) There i s a l s o a g e n e r a l tendency f o r female shadow p r i c e s of s m a l l f u l l - t i m e farms t o be around or above the female wage (249 NT$) (except SRa and SUGb), w h i l e the shadow p r i c e s on l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms a r e much lower and v e r y e r r a t i c . Dry l a n d shadow p r i c e s a r e h i g h and s h a r e d by l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms on the dominant l a n d type farms i n the Sugar r e g i o n , w h i l e the s m a l l f u l l - t i m e shadow p r i c e s are even h i g h e r . In the r i c e r e g i o n s , dry l a n d shadow p r i c e s a r e e r r a t i c and g e n e r a l l y n e g a t i v e . 151 The p r e c e d i n g d i s c u s s i o n of the shadow p r i c e s f o r the farms w i t h d i f f e r e n t c h a r a c t e r i s t i c s s u g g e s t s t h a t a l l t h e farm groups i n the a l l - p a d d y N o r t h r i c e r e g i o n share the o v e r a l l tendency t o equate the f a m i l y f a c t o r p r o d u c t i v i t i e s t o the n a t i o n a l average market p r i c e s or o f f i c i a l p r i c e s ( a l t h o u g h s m a l l f u l l - t i m e farms seem t o have l e s s a c c e s s t o the o f f i c i a l a s s e t m a r k e t ) . A d d i t i o n a l l y , the s m a l l f u l l - t i m e farms of the a l l - p a d d y farms i n the o t h e r r i c e r e g i o n s a l s o show t h i s tendency ( a l t h o u g h i n the SRa r e g i o n w i t h l e s s a c c e s s t o the o f f i c i a l a s s e t m a r k e t ) . A d d i t i o n a l l y , a l l the farms i n the Sugar r e g i o n (SRa, SUGb" 2) work w i t h a v e r y d i f f e r e n t t e c h n o l o g y than the farms of the r i c e r e g i o n s and the f a c t o r p r o d u c t i v i t i e s suggest a much more r u r a l s t r u c t u r e - o f the economic environment. Thus l a b o u r p r o d u c t i v i t i e s a r e g e n e r a l l y lower than the n a t i o n a l a g r i c u l t u r a l wage, w h i l e l a n d p r o d u c t i v i t i e s are n e a r l y 2.5 t i m e s the o f f i c i a l n a t i o n a l r e n t and dry l a n d shows p r o d u c t i v i t i e s comparable t o paddy l a n d . W i t h i n the r e g i o n , t h e r e i s not a g r e a t v a r i a t i o n i n the f a c t o r p r o d u c t i v i t i e s between the farm groups, so t h a t the d i s t r i b u t i o n of the f a m i l y f a c t o r s does not need t o change. The e s t i m a t i o n s f o r the paddy-dry mixed farms i n the R i c e r e g i o n s , tend t o produce s h i f t s i n the l a n d shadow p r i c e s which suggest t h a t the e f f e c t and i n t e r a c t i o n between the two l a n d t y p e s i s not c a p t u r e d v e r y w e l l i n the model. 1 52 T h i s may be a consequence of c o l l e c t i n g the farms w i t h v e r y l i t t l e d r y l a n d t o g e t h e r w i t h farms which a r e n e a r l y t o t a l l y d r y l a n d farms. The c u r v a t u r e problem t h a t we have a l r e a d y shown t o e x i s t i n s e c t i o n H.1, i s now f u r t h e r d i s c u s s e d because i t i s i m p o r t a n t f o r the i n t e r p r e t a t i o n of the movements i n f a c t o r p r o d u c t i v i t i e s when the f a m i l y s u p p l i e d f a c t o r mix changes. S i n c e g e n e r a l l y the l a n d p r o d u c t i v i t y p a t t e r n i s i n f l u e n c e d , i t i s n e c e s s a r y t o i n v e s t i g a t e the p o s s i b l e causes of the d i f f i c u l t y i n the e s t i m a t e d f u n c t i o n s . The r e l a t i o n s h i p which dominates the e s t i m a t e d f u n c t i o n s and the r e s u l t a n t paddy l a n d p r o d u c t i v i t i e s of the farm groups i s the r e l a t i o n s h i p between female l a b o u r and l a n d . As c o n s t a n t r e t u r n s t o s c a l e was the norm and because of the s e p a r a b i l i t y a s s u m p t i o n 4 3 , the i s s u e can be d i s c u s s e d around the e s t i m a t e d u n i t v a l u e i s o q u a n t between paddy l a n d and female l a b o u r 4 4 . The movements i n the paddy l a n d and female l a b o u r p r o d u c t i v i t i e s between the farm groups f o l l o w s from the endowment s t r u c t u r e and the shape of the e s t i m a t e d u n i t v a l u e i s o q u a n t . We know from c h a p t e r f o u r t h a t s m a l l f u l l - t i m e farms have a h i g h e r l a b o u r - l a n d r a t i o than s m a l l p a r t - t i m e farms and t h a t l a r g e f u l l - t i m e farms have the l o w e s t l a b o u r - l a n d r a t i o . However, the e s t i m a t e d i n f l u e n c e of the female l a b o u r i s such t h a t the l a n d p r o d u c t i v i t y f a l l s whenever t h e r e i s an a d d i t i o n of female l a b o u r t o the l a n d . The paddy l a n d shadow p r i c e i s thus l o w e s t on s m a l l 1 53 f u l l - t i m e farms because more female l a b o u r i s used per l a n d a r e a than on the o t h e r farms and the e s t i m a t e d i s o q u a n t s a r e concave. There c o u l d be s e v e r a l causes of t h i s e s t i m a t i o n r e s u l t . The f i r s t cause c o u l d be a d a t a problem, i n the measurement of the amounts of f a m i l y s u p p l i e d f a c t o r s , e s p e c i a l l y the female l a b o u r . The second cause c o u l d be the model s p e c i f i c a t i o n , which r e l i e s on 1) the s e p a r a b i l i t y assumption between on the one hand the output and bought i n p u t s and on the o t h e r hand the f a m i l y s u p p l i e d f a c t o r s and 2) the o p t i m i z a t i o n assumption of the c h o i c e of output and bought i n p u t mix. The measurement of the f a m i l y s u p p l i e d f a c t o r s had t o s t a y a t a l e v e l of a g g r e g a t i o n which c o u l d be i n a p p r o p r i a t e f o r the a c t u a l i t y of the p r o d u c t i o n s i t u a t i o n i n Taiwan. No d i f f e r e n t i a t i o n was p o s s i b l e i n the l a b o u r q u a l i t y . The o r i g i n a l d a t a was v e r y c a r e f u l l y c o l l e c t e d so t h a t the l a b o u r days were c o u n t e d . T h i s i s i n d e e d b e t t e r than what i s a v a i l a b l e f o r most a g r i c u l t u r a l s t u d i e s where o n l y the numbers of f a m i l y members i s known (so t h a t u s u a l l y l a b o u r days must be a p p r o x i m a t e d ) . However, i n the Taiwanese c a s e , w i t h the i n c r e a s e i n e d u c a t i o n and o f f - f a r m o p p o r t u n i t i e s (the l a t t e r s e l e c t i v e i n the c h o i c e of member's q u a l i t i e s ) , homogeneity of the farm l a b o u r q u a l i t y on the d i f f e r e n t farms can no l o n g e r be assumed. A d d i t i o n a l l y , the v a r i a t i o n s of the d i s u t i l i t y of farm work 1 54 f o r the immobile f a m i l y members have p r o b a b l y become b i g g e r between farm t y p e s because of the o f f - f a r m income p o s s i b i l i t i e s (combined w i t h income s h a r i n g p r a c t i c e s i n the h o u s e h o l d s ) . Thus c o u n t i n g o n l y the l a b o u r days may i n t r o d u c e l a r g e s t a t i s t i c a l v a r i a t i o n i n the measurement of the r e l a t i o n s h i p of l a b o u r t o the v a l u e added and thus t o the p r o d u c t i v i t y of the o t h e r f a c t o r s . In t h i s c o n t e x t i s i s i n t e r e s t i n g t h a t i t i s the female f a m i l y l a b o u r which causes the problem and not the male l a b o u r , p r o b a b l y because male l a b o u r i s both more homogeneous i n q u a l i t y and i n e v a l u a t i o n of the d i s u t i l i t y of w o r k i n g , and r e l a t e s more t o the market s i t u a t i o n . The measurement of the farm a s s e t v a r i a b l e was a l s o v e r y a g g r e g a t e d , so t h a t v a r i a t i o n s i n o p p o r t u n i t y c o s t s t r u c t u r e c o u l d r e s u l t . E.g. machinery, because i t p r o v i d e s an o b s e r v a b l e c o l l a t e r a l , can more e a s i l y be bought w i t h c r e d i t from the o f f i c i a l banking system. Thus f o r the farm t y p e s w i t h h i g h p r o p o r t i o n s of farm machinery i n the farm a s s e t v a l u e , the o p p o r t u n i t y c o s t w i l l be c l o s e t o the o f f i c i a l bank i n t e r e s t c o s t , and e s t i m a t e d p r o d u c t i v i t i e s of a s s e t s may r e f l e c t t h i s . The model s p e c i f i c a t i o n r e l i e s on s e v e r a l a s s u m p t i o n , so t h a t the e s t i m a t e d r e l a t i o n s h i p between v a l u e added and the f a m i l y s u p p l i e d f a c t o r s may s y s t e m a t i c a l l y be d i s t u r b e d i f these assumptions do not h o l d . Thus i f t h e r e e x i s t s e v e r a l s e t s of c r o p s , each s e t d i s t i n g u i s h a b l e by major d i f f e r e n c e s i n t h e i r t e c h n o l o g i e s and f a c t o r 1 55 i n t e n s i t i e s (which r e l y i n f a c t on s p e c i f i c f a m i l y s u p p l i e d f a c t o r s ) , then the s e p a r a b i l i t y assumption as s t a t e d i n ( 1 3)—(14) does not h o l d . We know from c h a p t e r f o u r t h a t the s e t of a v a i l a b l e c r o p s from which the farmers can choose i s v e r y l a r g e , and the c r o p s have d i s t i n c t i v e t e c h n o l o g i e s . Some need a l o t of f a m i l y l a b o u r per l a n d (e.g. v e g e t a b l e s ) because p r o d u c t i o n i s s e n s i t i v e t o c a r e f u l l l a b o u r a p p l i c a t i o n , t h u s r e q u i r i n g the s e l f - s u p e r v i s e d f a m i l y l a b o u r . Other c r o p s need l i t t l e f a m i l y l a b o u r per l a n d (e.g. r i c e , sugar) because the p r o d u c t i o n can be mechanized. T h i s s i t u a t i o n can be drawn as i n f i g u r e 5.1, where t h e r e i s a 1 $ - i s o q u a n t FF of the female f a m i l y l a b o u r - i n t e n s i v e c r o p and a 1 $ - i s o q u a n t LL of the l a n d - i n t e n s i v e c r o p . I f the Female / S F T Female l a b o u r / Labour D L 0 l a n d 0 l a n d f i g u r e 5.1 f i g u r e 5.2 156 a ssumption t h a t farmers are c h o o s i n g the o p t i m a l c r o p c h o i c e mix p e r f e c t l y i s a l s o v i o l a t e d , then the r e l a t i o n s h i p s of v a l u e added t o f a m i l y s u p p l i e d f a c t o r s c o u l d v e r y w e l l produce the concave i s o q u a n t i n e s t i m a t i o n s . Thus, i f most o b s e r v a t i o n s are d i s t r i b u t e d around these c r o p v a l u e i s o q u a n t s then the e s t i m a t i o n s w i l l produce an envelope f u n c t i o n AA. The i s s u e becomes thus a q u e s t i o n of whether f a r m e r s * 5 are are not m a x i m i z i n g t h e i r v a l u e - a d d e d by a l l o c a t i n g t h e i r f a m i l y f a c t o r s a c r o s s the c r o p s such t h a t the v a l u e m a r g i n a l p r o d u c t s of each f a c t o r are e q u a l i z e d i n k k each c r o p p r o d u c t i o n (VMP = VMP V k = i n p u t s ) . T h i s would FF L L mean a p r o d u c t i o n a l o n g ABCD i n f i g u r e 5.2, w i t h a s i m u l t a n e o u s p r o d u c t i o n of the l a b o u r and l a n d - i n t e n s i v e c r o p f o r farmers on endowment r a y s between OB and OC. Thus a farmer w i t h an endowment at E would produce OE of the FF l a b o u r - i n t e n s i v e c r o p and OE of the l a n d - i n t e n s i v e c r o p L L and have more than 1$ t o t a l v a l u e - a d d e d , i n s t e a d of 1$ from o n l y the l a b o u r - i n t e n s i v e c r o p , or l e s s than 1$ from o n l y the l a n d - i n t e n s i v e c r o p . Thus the c u r v a t u r e p r o p e r t y of the e s t i m a t e d value-added f u n c t i o n s tends t o suggest t h a t f a r m e r s have d i f f i c u l t y i n o p t i m a l l y c h o o s i n g the c r o p m ixes, and the d i f f i c u l t y of the c h o i c e becomes e s p e c i a l l y d i f f i c u l t f o r the farmers whose endowment r a t i o s a r e f a r from the endowment r a t i o s OB or OC where s p e c i a l i z a t i o n i s o p t i m a l . C o r r e c t c r o p d i v e r s i f i c a t i o n r e q u i r e s a l a r g e amount of v e r s a t i l i t y , a c c u r a c y and a good knowledge of both 157 the l a b o u r and l a n d - i n t e n s i v e c r o p s . T h i s a c c u r a c y may be l a c k i n g on the farms ( e s p e c i a l l y s i n c e the p a r t - t i m e farm groups f a l l i n the c a t e g o r y w i t h endowment r a t i o s between OB and OC). F u r t h e r r e s e a r c h i n t o the p r o d u c t i o n p r o c e s s w i l l be needed t o r e s o l v e t h i s i s s u e . The r e s e a r c h s h o u l d be d i r e c t e d towards the c h o i c e mechanism of the p r o d u c t i o n mix and the s t r u c t u r e of the s e p a r a t e c r o p t e c h n o l o g i e s . The data i n t h i s sample i s not a p p r o p r i a t e f o r the e s t i m a t i o n of s e p a r a t e c r o p p r o d u c t i o n f u n c t i o n s as i n p u t s cannot be a l l o c a t e d t o the d i f f e r e n t c r o p s . However, the o r i g i n a l r e p o r t e d farm i n f o r m a t i o n c o u l d be the b a s i s of such a d e t a i l e d s t u d y . The d a t a from the c r o p p r o d u c t i o n e s t i m a t i o n s c o u l d then be used i n a d e t a i l e d a n a l y s i s of the annual c r o p mix c h o i c e and the r e l a t i o n s h i p of t h i s c h o i c e t o the a v a i l a b i l i t y of the f a m i l y endowments i n each farm group. We c o n c l u d e from the i n v e s t i g a t i o n of a l l o c a t i v e e f f i c i e n c y , t h a t the i n v e s t i g a t i o n of the t o t a l f a c t o r p r o d u c t i v i t y a t the l e v e l of a g g r e g a t i o n of t h i s c h a p t e r has t o be i n t e r p r e t e d as p r e l i m i n a r y . The p r o d u c t i o n s i t u a t i o n on the farms has become v e r y complex, so t h a t s i m p l e model s p e c i f i c a t i o n s become l e s s a p p r o p r i a t e . However, the p a t t e r n s of the e s t i m a t e d l a n d p r o d u c t i v i t y d i f f e r e n c e s between farm t y p e s , t o g e t h e r w i t h the shape of the e s t i m a t e d v a l u e added f u n c t i o n s , do seem t o suggest t h a t l a n d and 1 58 female f a m i l y l a b o u r a re not v e r y m o b i l e , so t h a t t h e r e i s no a c t i v i t y of a d j u s t i n g the l a n d to the f a m i l y l a b o u r endowments or the r e v e r s e . Thus, each f a r m i n g household i s bound by the f a m i l y l a b o u r and l a n d endowments and s h o u l d c o r r e c t l y a d j u s t the output mix a c c o r d i n g l y . The shapes of the e s t i m a t e d f u n c t i o n s suggest t h a t t h i s o utput mix c h o i c e may be p a r t i c u l a r l y u n s u c c e s f u l l f o r the fa r m e r s whose f a c t o r endowments are such t h a t they s h o u l d c a r e f u l l y d i v e r s i f y . T h i s means t h a t t h e r e c o u l d be a g a i n f o r the s e c t o r i f more a t t e n t i o n was g i v e n to t e a c h i n g farmers a c c u r a c y i n the c h o i c e of c r o p d i v e r s i f i c a t i o n . H.4 T e c h n i c a l e f f i c i e n c y T e c h n i c a l e f f i c i e n c y cannot be t e s t e d d i r e c t l y i n the c o n t e x t of the ' l i n e a r ' and ' g e n e r a l i z e d l i n e a r ' s p e c i f i c a t i o n s of the valu e - a d d e d f u n c t i o n s . I t i s a l s o v e r y d i f f i c u l t t o s e p a r a t e t e c h n i c a l i n e f f i c i e n c y ( l e s s value-added from a g i v e n s e t of i n p u t s on an i n e f f i c i e n t farm than on an e f f i c i e n t farm) from a l l o c a t i v e e f f i c i e n c y when the d i f f e r e n t c a t e g o r i e s of farmers a r e known t o be p r o d u c i n g on d i f f e r e n t endowment rays and have a c h o i c e of s e v e r a l o u t p u t s . The reason f o r t e c h n i c a l i n e f f i c i e n c y when o b s e r v i n g the t o t a l output or the t o t a l v a l u e - a d d e d from the i n p u t s c o u l d be the i n a p p r o p r i a t e c h o i c e of the output mix, which i s an a l l o c a t i v e i s s u e . Thus t e c h n i c a l i n e f f i c i e n c y i s o n l y c l e a r l y d e f i n e d i n the s i t u a t i o n where o n l y one 1 59 output i s produced. However, i t i s s t i l l v a l u a b l e t o i n v e s t i g a t e i f p a r t - t i m e f a r m e r s ' a c t u a l v a l u e - a d d e d i s s y s t e m a t i c a l l y below the amount t h a t the e s t i m a t e d f u n c t i o n A would p r e d i c t from t h e i r f a c t o r i n p u t s (II-n<0), w h i l e t h e r e A i s a s y s t e m a t i c u n d e r e s t i m a t i o n on f u l l - t i m e farms (II-n>0). A Dummy v a r i a b l e r e g r e s s i o n s on (n-n) were e s t i m a t e d and the r e s u l t s are p r e s e n t e d i n t a b l e E.12-14. Given the ' g e n e r a l i z e d l i n e a r ' model, p a r t i c i p a t i o n e f f e c t s are s i g n i f i c a n t and i n f a v o u r of f u l l - t i m e farms o n l y on the dominant farm type f o r each r e g i o n ( t h e a l l - p a d d y farms i n the r i c e r e g i o n s , the mixed farm i n the sugar r e g i o n ) . The non-dominant l a n d type farms show no p a r t i c i p a t i o n e f f e c t . So comparing dominant l a n d t ype farms, s m a l l f u l l - t i m e farms have s y s t e m a t i c a l l y more value-added than would be p r e d i c t e d from t h e i r f a c t o r s and s m a l l p a r t - t i m e farmers have l e s s value-added than would be p r e d i c t e d from t h e i r f a c t o r s . The same c o n c l u s i o n can be drawn i n t h e ' l i n e a r ' model. On the dominant farm l a n d t y p e s of t h e r e g i o n (on NRa, MRa and SUGb) the d i f f e r e n c e between the a c t u a l and the e s t i m a t e d net r e t u r n s i s s i g n i f i c a n t l y s m a l l e r (more n e g a t i v e ) on p a r t - t i m e farms than on f u l l - t i m e farms. In the o t h e r cases t h e r e i s no e f f e c t from p a r t i c i p a t i o n . We can c o n c l u d e f o r the dominant l a n d t y p e farms, t h a t g e n e r a l l y more value-added i s g e n e r a t e d from the f a m i l y f a c t o r s on the f u l l - t i m e farms than on the p a r t - t i m e farms. 1 60 This is probably the consequence of the fact that the development of exact farming methods is usually concentrated on the methods for prime land farms of each region. Thus, there w i l l be a s i g n i f i c a n t e ffect from c a r e f u l l farm choices' (as main family a c t i v i t y ) , which i s lost on part-time farms. I . SUMMARY AND CONCLUSION The investigation in t h i s chapter indicates that there are no gains from a system of large farms. The evidence also points to problems with the marketing of both land and female family labour in the present context of the land l e g i s l a t i o n and the character of family labour. There is also some evidence, for a .loss of e f f i c i e n c y on part-time farms of the dominant land type in each region, but there are no e f f e c t s on the other land type farms. The approach was to estimate a value-added production function which i s a special case of the variable p r o f i t function. Because of price data l i m i t a t i o n s , the entire variable p r o f i t function could not be estimated but only the relationship between the family supplied factors and the real net return from farming. For the estimations, we sp e c i f i e d a linear function, a linear function with slope dummy variables for the farm c h a r a c t e r i s t i c s , and a generalized linear function between real net return and the five family factors: paddy and dry 161 l a n d , male and female l a b o u r and farm a s s e t s . We c o n t r o l l e d f o r s o i l and c l i m a t e by s e p a r a t e l y e s t i m a t i n g a l l - p a d d y , paddy-dry mixed and a l l - d r y farm l a n d households f o r the f o u r r e g i o n s . T h i s gave us ni n e c a s e s as o n l y the Sugar r e g i o n had s u f f i c i e n t a l l - d r y o b s e r v a t i o n s . The s t a t i s t i c a l f i t was g e n e r a l l y v e r y good w i t h R 2 a t l e a s t .81. A l s o , the c o n c l u s i o n s t h a t can be drawn from the l i n e a r dummy model g e n e r a l l y c o n f i r m those of the g e n e r a l i z e d l i n e a r model (and where m e a n i n g f u l , those of the l i n e a r f u n c t i o n ) . We can c o n c l u d e t h a t the assumption of i n c r e a s i n g r e t u r n s t o s c a l e can be r e j e c t e d i n a l l c a s e s except the South R i c e a l l - p a d d y case where the t e c h n o l o g y i s non-homothetic. Constant r e t u r n s t o s c a l e p r e v a i l , so net v a l u e - a d d e d i s p r o p o r t i o n a l t o the s c a l e of f a m i l y farm o p e r a t i o n . There i s no g a i n from h a v i n g o n l y l a r g e s c a l e farms i n the s e c t o r . Our f i n d i n g s mean t h a t the m e c h a n i z a t i o n of a g r i c u l t u r a l p r o d u c t i o n has not i n t r o d u c e d i n c r e a s i n g r e t u r n s t o s c a l e . The machine s e r v i c e market i s thus s u f f i c i e n t l y w e l l o r g a n i z e d t h a t t h e r e are no i n d i v i s i b i l i t i e s i n machine use. I n c r e a s i n g r e t u r n s t o s c a l e because of f i e l d s i z e advantages a l s o do not p l a y a r o l e , p o s s i b l y because of the requirement of l e v e l f i e l d s i n r i c e p r o d u c t i o n (the most mechanizable c r o p ) and because of the f i e l d s i z e l i m i t a t i o n s i n an i r r i g a t e d system. Machine s e r v i c e c o n t r a c t s where p r i c e s a r e quoted per h e c t a r e and 1 62 not per time p e r i o d , a l s o d i m i n i s h the advantage f o r farmers w i t h l a r g e and unfragmented f i e l d s . The i s s u e of a l l o c a t i v e e f f i c i e n c y can be d i s c u s s e d g e n e r a l l y by comparing the average f a c t o r o p p o r t u n i t y c o s t w i t h the average f a c t o r p r o d u c t i v i t i e s as g e n e r a t e d by the g e n e r a l i z e d l i n e a r model. Average l a b o u r p r o d u c t i v i t i e s are c l o s e t o market wages where good i n d u s t r i a l employment o p p o r t u n i t i e s e x i s t . Everywhere e l s e the l a b o u r shadow p r i c e s a r e e r r a t i c and below the wage r a t e s , w i t h female l a b o u r shadow p r i c e s below the male shadow p r i c e . Thus shadow p r i c e s of l a b o u r r e f l e c t d i f f e r e n t i a l e x i s t e n c e of employment o p p o r t u n i t i e s i n the r e g i o n s . Farm a s s e t p r o d u c t i v i t i e s tend t o be a t , or s l i g h t l y above, the bank c a p i t a l c o s t (18.9%) on the dominant l a n d type farm and*at or above the market c a p i t a l c o s t (40.8%) on the o t h e r l a n d type farms. T h i s s u g g e s t s d i f f e r e n t i a l a c c e s s t o the c a p i t a l markets where the dominant l a n d type farmers a r e more i n c o r p o r a t e d i n t o the o f f i c i a l c a p i t a l market as p a r t of the g e n e r a l o f f i c i a l a t t e n t i o n t h a t these f a r mers r e c e i v e . The average paddy l a n d p r o d u c t i v i t i e s a r e a t l e a s t two t i m e s the o f f i c i a l r e n t a l r a t e , except i n the N o r t h R i c e r e g i o n where they are a t or below the r e n t a l c o s t . T h i s i s why l e g a l i z e d r e n t a l agreements a r e no l o n g e r a v e h i c l e of l a n d r e a l l o c a t i o n . Dry l a n d p r o d u c t i v i t i e s are a l s o v e r y h i g h i n the Sugar r e g i o n but n e g a t i v e i n the r i c e r e g i o n s . Thus, i n the Sugar r e g i o n d r y l a n d i s an a g r i c u l t u r a l a s s e t 163 of e q u a l v a l u e as paddy l a n d , whereas i n the r i c e r e g i o n s i t i s h e l d f o r s p e c u l a t i v e purposes because c o n v e r s i o n to c ommercial use i s expected i n the f u t u r e . The p a t t e r n of the m a r g i n a l p r o d u c t i v i t i e s of the f a m i l y f a c t o r s on s m a l l f u l l - t i m e , s m a l l p a r t - t i m e and l a r g e f u l l - t i m e farms suggest t h a t b o t h l a n d and female l a b o u r a r e f i x e d endowments, w h i l e male l a b o u r seems t o respond t o the l o c a l employment o p p o r t u n i t y s i t u a t i o n . Farm a s s e t s a l s o seem t o be used i n - a c c o r d w i t h the e x i s t e n c e of an a c t i v e market, a l t h o u g h a c c e s s t o c a p i t a l markets may not be u n i f o r m f o r a l l farm t y p e s (but t h i s may i n p a r t be a consequence of the c o m p o s i t i o n of the farm a s s e t s ) . However, the e s t i m a t i o n r e s u l t s do t e n d t o p o i n t t o the f a c t t h a t the p r o d u c t i o n s i t u a t i o n i n Taiwan i s no l o n g e r a p p r o p r i a t e l y c a p t u r e d i n s i m p l e model s p e c i f i c a t i o n s where a l a r g e degree of a g g r e g a t i o n i s imposed (based on p r o f i t m a x i m i z i n g and s e p a r a b i l i t y assumptions between s u b s e t s o f t h e p r o d u c t i o n v a r i a b l e s ) . The e s t i m a t i o n r e s u l t s of the aggregated model used tends t o suggest t h a t both l a n d and female l a b o u r a r e immobile ( w i t h as consequence t h a t l a b o u r q u a l i t y and work d i s u t i l i t y d i f f e r e n c e s s t a r t to i n f l u e n c e the farm p r o d u c t i o n s i t u a t i o n ) , and t h i s , combined w i t h the e x i s t e n c e of a l a r g e v a r i e t y of c r o p s w i t h d i f f e r e n t r e q u i r e m e n t s f o r these f a c t o r s , t e n d s t o make the a c c u r a c y of the a n n u a l c r o p c h o i c e d e c i s i o n c r u c i a l f o r the o p t i m a l use of the f a m i l y 1 6 4 resources. In this context, the shapes of the estimated functions seem to suggest that not a l l farmers are equally successful at adjusting their production pattern to their resource endowments. Especially the farmers without endowment mixes that give them a readily i d e n t i f i a b l e compartative advantage towards a s p e c i a l i z a t i o n in the production of certain, crops seem to make the mistakes. Thus small full-time farms with their high labour-land endowment r a t i o and large full-time farmers with their low labour-land endowment r a t i o tend to correctly choose the output mix because their endowments very obviously point to the optimal crop choices: supervision-sensitive and labour-intensive crops on the small full-time farms and land-intensive and supervision-neutral crops on large full-time.farms. However, the small part-time farms f a l l between these two with their endowment r a t i o and should choose a crop mix which i s a combination of the two extremes. This choice requires much more v e r s a t i l i t y , knowledge and f l e x i b i l i t y , which the shapes of the estimated value-added functions suggest as lacking. Thus attention by the a g r i c u l t u r a l extension establishment to the issue of accurate crop d i v e r s i f i c a t i o n might produce a gain for the sector. However, further investigation of t h i s issue i s necessary and would require data which was not available, but which could be available i f the o r i g i n a l data could be used. 1 65 On the a l l - p a d d y farms f o r the N o r t h and Mid R i c e r e g i o n and the dry-paddy mixed farms of the Sugar r e g i o n , t h e r e i s a l s o some e v i d e n c e f o r an added e f f i c i e n c y l o s s beyond the consequences of the endowment r a t i o s which i s s p e c i f i c a l l y connected t o the p a r t - t i m e c h a r a c t e r of the farms. T h i s i s p r o b a b l y l i n k e d t o the e x i s t e n c e of v e r y d e t a i l e d p r o d u c t i o n methods f o r these l a n d t y p e s , as r e s e a r c h tends t o c o n c e n t r a t e on these farms. F u l l - t i m e f armers can take advantage of these methods, but p a r t - t i m e farmers cannot as t h e i r farm time i s r e s i d u a l . On the non-dominant farms, f a r m i n g methods are more g e n e r a l l y s p e c i f i e d so t h a t so t h a t f u l l - t i m e farmers do not have an advantage over p a r t - t i m e f a r m e r s . 1 66 J . NOTES 1 T h i s i s the problem of the immobile f a m i l y members who are p r o d u c t i v e as farmers but not o t h e r w i s e . 2 The sample d a t a was d e v i d e d i n t o s i z e c a t e g o r i e s . For each s i z e c l a s s the average net p r o f i t was c a l c u l a t e d and then graphed a g a i n s t the farm s i z e - c l a s s . 3 Two r e g i o n s were sampled f o r two y e a r s 4 Three p r o d u c t i o n f u n c t i o n s were e s t i m a t e d and t h e i r parameters were not v e r y d i f f e r e n t from each o t h e r . 5 For each farm s i z e , t he m a r g i n a l v a l u e p r o d u c t s was c a l c u l a t e d a t the ge o m e t r i c mean of the farm i n p u t s of the s i z e - c l a s s . 6 T h i s was t e s t e d by u s i n g s l o p e dummy v a r i a b l e s f o r the s i z e - c l a s s on the c o e f f i c i e n t s of the Cobb-Douglas f u n c t i o n and an a d d i t i v e dummy v a r i a b l e on the i n t e r c e p t . The dummy v a r i a b l e c o e f f i c i e n t s were not s i g n i f i c a n t l y d i f f e r e n t from z e r o , so t h a t the p r o d u c t i o n f u n c t i o n was the same f o r a l l farm s i z e - c l a s s e s . 7 A l t h o u g h i t i s d i f f i c u l t t o a s c e r t a i n from the a r t i c l e , Bardhan seems t o have c a l c u l a t e d the m a r g i n a l v a l u e product of l a b o u r f o r each farmer, u s i n g the e s t i m a t e d l a b o u r e l a s t i c i t y and the farmer's average l a b o u r p r o d u c t i v i t y . The d i f f e r e n c e between the farmer's wage r a t e and h i s MVP was c a l c u l a t e d . The average d i f f e r e n c e over a l l farmers was s i g n i f i c a n t l y h i g h e r than z e r o . However, t h i s c a l c u l a t i o n of Bardhan does not t e l l us whether the d i f f e r e n c e was a l s o l a r g e r than z e r o f o r s m a l l farms. 8 A v e r y good e x p o s i t i o n of the problems of measuring e f f i c i e n c y of farms of v a r i o u s s i z e s i n d e v e l o p i n g c o u n t r i e s ( I n d i a , Greece) i s p r e s e n t e d i n Y o t o p o u l o s , Nugent (1976), ch4-6 9 see Forsund et a l . (1980) 10 The t e c h n o l o g y would e v e n t u a l l y have t o t u r n i n t o a d e c r e a s i n g r e t u r n t o s c a l e t e c h n o l o g y or the o p t i m a l s i z e of t h e . f a r m would be the t o t a l c u l t i v a t a b l e s i z e of the c o u n t r y . In t h e Taiwan case our i n t e r e s t i s d i r e c t e d t o a s i z e i n t e r v a l of .25 t o 7 h e c t a r e s , the p r e s e n t l y 1 67 e x i s t i n g farm s i z e range, which might be expanded t o 10 h e c t a r e s . 11 E m p i r i c a l s t u d i e s i n o t h e r d e v e l o p i n g c o u n t r i e s c o n s i s t e n t l y f i n d c o n s t a n t r e t u r n s t o s c a l e t o be the norm, except i n wheat p r o d u c t i o n , see e.g. B a r r y (1970), C l i n e (1973), Bardhan (1973). 12 T e c h n i c a l e f f i c i e n c y , s t r i c t l y s p e a k i n g , can o n l y be d e f i n e d f o r each output t e c h n o l o g y . I f t h e r e i s a m u l t i - p r o d u c t s i t u a t i o n , then the assumption of s i m i l a r p r o d u c t i o n mix must be added i n the t e c h n i c a l e f f i c i e n c y argument, o t h e r w i s e t h e r e i s a c o n f u s i o n between t e c h n i c a l e f f i c i e n c y and a l l o c a t i v e (mix c h o i c e ) e f f i c i e n c y . 13 As d i s t r i b u t i o n of farm t e c h n o l o g y i s i n c r e a s i n g l y done v i a farm magazines and l a b e l i n g on the packages of the f e r t i l i z e r , i n s e c t i c i d e s and h e r b i c i d e s , f u n c t i o n a l l i t e r a c y i s a n e c e s s i t y f o r a b s o r p t i o n of the new t e c h n o l o g i e s . 14 U n l e s s b e i n g a woman or o l d i s e x a c t l y c o r r e l a t e d w i t h low l e v e l of e d u c a t i o n . 15 Land market r e g u l a t i o n s may d r i v e a l a r g e t r a n s a c t i o n c o s t (or r i s k c o s t ) wedge between l a n d r e n t r e c e i v e d and p a i d , or between l a n d v a l u e r e c e i v e d and p a i d i n a s a l e , t o the p o i n t where no t r a n s a c t i o n s t a k e p l a c e and l a n d i s a f i x e d q u a n t i t y f o r the h o u s e h o l d . 16 The growth of income per c a p i t a i s s h i f t i n g the food demand out of s t a p l e c r o p s ( r i c e ) i n t o h i g h e r q u a l i t y f o o d ( v e g e t a b l e s , f r u i t s ) . 17 T h i s approach was used by A l l e n (1982). 18 Even i f r e g i o n a l p r i c e s were a v a i l a b l e , t h i s would not h e l p the e s t i m a t i o n s , because the r e g i o n s a r e e s t i m a t e d s e p a r a t e l y . 19 The u s u a l v alue-added approach assumes s e p a r a b i l i t y between the s e t of o u t p u t s , the s e t of i n t e r m e d i a t e i n p u t s and the p r i m a r y f a c t o r s . On the o t h e r hand, a p r o d u c t i o n f u n c t i o n approach assumes s e p a r a b i l i t y between the s e t of o u t p u t s and the s e t of a l l the i n p u t s , t h u s b e i n g l e s s r e s t i c t i v e , but i t i s b e t t e r t o e s t i m a t e p r o f i t f u n c t i o n s (see b e l o w ) . The l e a s t r e s t r i c t i v e a pproach i s the t r a n s f o r m a t i o n f u n c t i o n approach, but i t would a l s o be b e t t e r t o e s t i m a t e p r o f i t f u n c t i o n s (based on the assumption t h a t f o r t h e c r o p s and the i n p u t s which came on the market t h a t t h e r e was an attempt a t p r o f i t 1 68 maximazing w i t h r e s p e c t t o the p r i c e s , which i n t r o d u c e s a v i o l a t i o n of the r e g r e s s i o n e s t i m a t i o n assumptions i n the t r a n s f o r m a t i o n f u n c t i o n e s t i m a t i o n or the p r o d u c t i o n f u n c t i o n e s t i m a t i o n ) . But the v a r i a b l e p r o f i t f u n c t i o n approach can not be used because we do not have enough p r i c e d a t a p o i n t s ( a l s o i n the d e r i v e d output s u p p l y f u n c t i o n s e s t i m a t i o n s , the problem of the l a r g e number of ze r o o b s e r v a t i o n s would be a pr o b l e m ) . As we have t o impose s e p a r a b i l i t y , we d e c i d e d t o impose i t between the set of a l l o u t p u t s + bought i n p u t s and the f a m i l y i n p u t s , t h e r e b y l e a v i n g the r e l a t i o n s h i p between the o u t p u t s and the bought i n p u t s u n r e s t r i c t e d . 20 The sample does not i n c l u d e pure a n i m a l farms, a l l a re c r o p farms, w i t h some l i v e s t o c k as a s i d e l i n e ( c h i c k e n s , ducks and a t most 10 p i g s ) . Thus l a n d i s an e s s e n t i a l f a c t o r 21 T h i s i s s i m i l a r t o Bardhan's method of a l l o w i n g s l o p e dummy v a r i a b l e s i n the Cobb-Douglas f u n c t i o n . The i n t e r p r e t a t i o n f o r the v a r i a t i o n i n the m a r g i n a l p r o d u c t s i s however v e r y d i f f e r e n t i n our GL model v e r s u s Bardhan's CD model. 22 T h i s method i s d e s c r i b e d i n more d e t a i l i n s e c t i o n E.3. 23 T h i s i s s i m i l a r t o Bardhan who a l s o c a l c u l a t e d the far m e r s ' shadow p r i c e s t o compare them t o the wages. 24 T h i s i s s i m i l a r t o Bardhan's method of a l l o w i n g i n t e r c e p t dummy v a r i a b l e s on the c o n s t a n t of the Cobb-Douglas p r o d u c t i o n f u n c t i o n . Both methods were d e s i g n e d t o t e s t t e c h n i c a l e f f i c i e n c y . 25 The hours spent on farm b u s i n e s s by g o i n g t o the market or the Farmers' A s s o c i a t i o n , or d o i n g the books, were not always r e p o r t e d , so t h a t male l a b o u r i s somewhat u n d e r r e p o r t e d . 26 T h i s i s the c o n v e r s i o n r a t e u s u a l l y used on a l l female l a b o u r i n p u t i n Taiwan a g r i c u l t u r a l p r o d u c t i o n i n f o r m a t i o n . 27 The s h a r e s of the d i f f e r e n t a s s e t s d i d change over the nin e y e a r s : Year 1 972 1980 AVER L i v e s t o c k 31 13 21 M a c h i n e s + t o o l s 30 48 37 T r e e s 1 3 1 4 14 Farm i n v e n t o r y 26 25 28 169 28 We found no s t u d i e s t h a t c o u l d h e l p us t o assume re a s o n a b l e d e p r e c i a t i o n - a p p r e c i a t i o n r a t e s f o r the Taiwanese farm a s s e t s . S t u d i e s from d e v e l o p e d c o u n t r i e s do not a p p l y . P o s s i b l y f o r machinery, Japanese r a t e s might a p p l y . But f o r the t r o p i c a l f r u i t t r e e s , the r a t e s are as yet unknown. For l i v e s t o c k n e i t h e r the Western s t u d i e s (too hot) nor the peasant A s i a n systems ( t o o c o m m e r c i a l i z e d ) a p p l y . 29 The m e a n i n g f u l o p p o r t u n i t y c o s t i s t h u s the i n t e r e s t r a t e . S i n c e a l l o w a n c e s h o u l d be made f o r d e p r e c i a t i o n - a p p r e c i a t i o n , and g i v e n the farm a s s e t s h a r e s , net d e p r e c i a t i o n i s . p r o b a b l y p o s i t i v e , the i n t e r e s t r a t e w i l l be the minimum v a l u e t h a t the shadow p r i c e of a s s e t s s h o u l d be f o r a l l o c a t i v e e f f i c i e n c y . 30 Tax, i n t e r e s t c o s t and l a n d r e n t c o s t s were not deducted. We are thus assuming t h a t the net p r o f i t ( b e f o r e t a x e s , l a n d r e n t and i n t e r e s t c o s t s are deducted) must pay f o r the t o t a l amount of l a n d c u l t i v a t e d ( r e g a r d l e s s of ownership) and farm a s s e t s ( r e g a r d l e s s of i t s f i n a n c i n g ) and the o t h e r f a m i l y i n p u t s . Our d e f i n i t i o n of net r e t u r n i s thus not e n t i r e l y the same as farm income goi n g t o the f a m i l y . The l a t t e r i s c a l c u l a t e d a f t e r t a x e s and l a n d r e n t s are p a i d and a f t e r i n t e r e s t i s p a i d on l o a n s . 31 U s u a l l y i f the d i a g o n a l elements a r e p o s i t i v e f o r the whole sample, they are a l s o p o s i t i v e i n the subsamples where the farms are grouped a c c o r d i n g t o s i z e and p a r t i c i p a t i o n . 32 See comments t o t a b l e E.9 f o r the non-homothetic case f o r an i n t e r p r e t a t i o n i n terms of s c a l e economies. 33 The o f f i c i a l l a n d r e n t , the average male and female ( c o n v e r t e d ) wage and the o f f i c i a l and market i n t e r e s t r a t e s . See appendix A and t a b l e A.1. 34 Thus f o r the ' l i n e a r ' model n=va, the m a r g i n a l p r o d u c t i v i t y of the f a c t o r ( 3II/3V=a) i s r e p o r t e d , and the s t a n d a r d d e v i a t i o n s are the square r o o t s of the d i a g o n a l elements of (V'V)~ 1o- 2 = v a r ( a ) . For the ' g e n e r a l i z e d L i n e a r ' model of e q u a t i o n ( 3 3 ) , the m a r g i n a l p r o d u c t i v i t y (VMP) f o r each farmer i s g i v e n as i n e q u a t i o n ( 3 4 ) , where w e A r e p o r t the average over the H-number of h o u s e h o l d s : ZVMP h/H and the s t a n d a r d d e v i a t i o n of the base^ c o e f f i c i e n t (y0) i n the dummy r e g r e s s i o n s on the VMP as i n e q u a t i o n ( 3 5 ) : VMP=7 0+Z7 id 4+Ly d , so the s t a n d a r d d e v i a t i o n i s the square r o o t of 'the element of the v a r i a n c e - c o v a r i a n c e m a t r i x ( D ' D ) " 1 a 2 t h a t i s a s s o c i a t e d w i t h 7 0. T h i s base 7 0 i s the VMP f o r the l a r g e f u l l - t i m e farm. 170 35 The average female wage was 199 NT$-; but a f t e r c o n v e r s i o n i s 249 NT$: the female wage f o r t h e e q u i v a l e n t l a b o u r from women. 36 The most common form of a p r i v a t e market c r e d i t system i s the s a v i n g s p o o l system. The o f f i c i a l c r e d i t system i s c o l l e c t e d under the U n i f i e d A g r i c u l t u r a l C r e d i t Program and the i n t e r e s t r a t e s quoted i n t h i s study a re f o r unsecured l o a n s . 37 I f we were t o assume d e p r e c i a t i o n - a p p r e c i a t i o n r a t e s as i n Canada ( l i v e s t o c k , t r e e s : a p p r e c i a t i o n 4%, machinery: d e p r e c i a t i o n 13%, i n v e n t o r y : d e p r e c i a t i o n 0%) and use the sample w e i g t h s of the a s s e t s , t h e net d e p r e c i a t i o n r a t e would be 3.41%. 38 A l t h o u g h i t i s o b v i o u s t h a t the g e n e r a l i z e d l i n e a r f u n c t i o n does impose somewhat more r e g u l a r i t y on the m a r g i n a l p r o d u c t i v i t i e s . T h i s r e s u l t s from the re q u i r e m e n t s t h a t a l l o b s e r v a t i o n s have t o be i n c l u d e d i n the form of the g e n e r a l i z e d l i n e a r f u n c t i o n . The l i n e a r dummy v a r i a b l e f u n c t i o n does not impose as much s i m i l a r i t y i n t e c h n o l o g y on a l l farm groups. 39 T h i s i s the model where the g e n e r a l i z e d l i n e a r f u n c t i o n i s e s t i m a t e d w i t h the r e s t r i c t i o n s : a P M = a.,jM= a M F = a M h = 0 The t e s t s t a t i s t i c s for. t h i s assumption a r e r e p o r t e d i n t a b l e E.3. 40 T h i s i s t r o u b l i n g as the male wage has been r i s i n g from 200 NT$ i n 1972 t o 383 NT$ i n 1980, thus i n d i c a t i n g t h a t male shadow p r i c e s a r e p r o g r e s s i v e l y more out of l i n e . T h i s may be a consequence of an i n c r e a s i n g i n c i d e n c e of i m m o b i l i t y of the a g r i c u l t u r a l male l a b o u r f o r c e as the male a g r i c u l t u r a l f a m i l y workers become o l d e r , w i t h o u t m o b i l e young members e n t e r i n g t h e farm a c t i v i t y . . 41 The MRb case where t h e shadow p r i c e of l a n d on s m a l l farms i s n e g a t i v e c o u l d be l i n e a r however, so t h a t a l l farm groups share the same p o s i t i v e shadow p r i c e . 42 The SUGc e s t i m a t i o n s of the VMP dummy r e g r e s s i o n s a re e r r a t i c p r o b a b l y because t h e r e a r e too few o b s e r v a t i o n s i n each farm group c e l l , as the t o t a l number of o b s e r v a t i o n i n the sample i s o n l y 91. 43 T h i s i s the consequence of the s e p a r a b i l i t y assumption i n s e c t i o n D., as s e p a r a b i l i t y means: 171 9 — [ 311/3 v. 9q 9n/9v k where v i s a f a m i l y i n p u t and q i s a p r i c e , e i t h e r of output or bought i n p u t s . Thus p r i c e changes do not change the shape of the va l u e - a d d e d i s o q u a n t s i n the f a m i l y i n p u t space. 44 G e n e r a l l y e v i d e n c e p o i n t s t o m o b i l i t y of male l a b o u r and farm a s s e t s , so t h a t the main f a c t o r which changes the l a n d p r o d u c t i v i t y i s the female l a b o u r amounts. 45 T h i s i s v e r y s i m i l a r t o i n t e r n a t i o n a l t r a d e t h e o r y , where c o u n t r i e s ( f a r m e r s ) are unable t o t r a d e t h e i r f a c t o r s a c r o s s t h e i r b o r d e r s ( f a r m s ) . I n s t e a d they t r a d e p r o d u c t s ( c r o p s ) a t the p r i c e s s e t i n the w o r l d market ( a g r i c u l t u r a l p r o d u c t m a r k e t s ) . The d e c i s i o n i s t o maximize the c o u n t r y ' s (farm's) value-added by f i n d i n g the p r o d u c t (crop) mix which i s o p t i m a l f o r the c o u n t r y ( f a r m ) , namely where the p r o d u c t i v i t i e s of the immobile p r o d u c t i o n f a c t o r s a re e q u a l i z e d a c r o s s i n d u s t r i e s ( c r o p s ) . In the c o u n t r y case t h i s means t r a d i n g of these f a c t o r s of p r o d u c t i o n between the i n d u s t r i e s i n s i d e the c o u n t r y and thus i n t r a - c o u n t r y market p r i c e s f o r the f a c t o r s because s e p a r a t e a g e n t s d e c i d e the p r o d u c t i o n output of each i n d u s t r y . However i n the case of the farmer, s i n c e he i s the same agent who produces the s e v e r a l c r o p s , t h e r e i s no need f o r an i n t r a - f a r m f a c t o r market. The n e c e s s i t y of e q u a l i z i n g the v a l u e m a r g i n a l p r o d u c t s of the f a c t o r s a c r o s s the p r o d u c t s i s however s t i l l t h e r e on the farm f o r the o p t i m i z a t i o n of the value-added ( H e c h s h e r - O h l i n and S t o l p e r - S a m u e l s o n theorems). Note too t h a t , where i n the i n t e r n a t i o n a l t r a d e s i t u a t i o n i t i s du b i o u s t h a t the assumptions of thes e theorems are f u l f i l l e d , they are almost a u t o m a t i c a l l y f u l f i l l e d i n the farmer c a s e . 1 72 CHAPTER VI CONCLUSION The q u e s t i o n t h a t t h i s study has a t t e m p t e d t o answer i s : ' I s t h e r e e m p i r i c a l j u s t i f i c a t i o n f o r the c l a i m s made by the p o l i c y makers i n Taiwan t h a t the p r e s e n t s t a g n a t i o n i n a g r i c u l t u r e i s l a r g e l y a t t r i b u t a b l e t o the s m a l l n e s s and the p a r t - t i m e o p e r a t i o n of an i n c r e a s i n g number of farms?' S i n c e the l a t e 1960s, a g r i c u l t u r a l growth has been sl o w , d e s p i t e the a d o p t i o n of a l a b o u r - s a v i n g development s t r a t e g y i n response t o the c o m p e t i t i o n f o r l a b o u r from the n o n - a g r i c u l t u r a l s e c t o r s . The c o n t i n u e d slow growth has prompted the a g r i c u l t u r a l a u t h o r i t i e s t o r e c o n s i d e r the 1949-53 l a n d reform laws i n t h e i r concern about the d e c l i n e i n the number of l a r g e f u l l - t i m e farms. In c h a p t e r I I , we i d e n t i f i e d t h r e e f a c t o r s which have c o n t r i b u t e d t o the d e c l i n e i n farm s i z e : the l a n d r e f o r m laws, the i n h e r i t a n c e custom and the i n c r e a s i n g demand, f o r l a n d f o r n o n - a g r i c u l t u r a l uses. Four f a c t o r s were i d e n t i f i e d as h a v i n g i n f l u e n c e d the growth of p a r t - t i m e f a r m i n g : a l a b o u r market t h a t works w e l l , the extended f a m i l y system, the e x p a n s i o n of the s p e c i a l i z e d 'custom s e r v i c e s ' market i n t o more farm a c t i v i t i e s , and the r a p i d d e c e n t r a l i z e d i n d u s t r i a l growth. P a r t of the s t a g n a t i o n i n the a g r i c u l t u r a l growth i s thus immediately a t t r i b u t a b l e t o the l o s s of l a b o u r and 1 73 l a n d r e s o u r c e s i n a g r i c u l t u r e . T h i s l o s s of r e s o u r c e s , however, e x p r e s s e s i t s e l f i n Taiwan by an i n c r e a s e i n the number of s m a l l and p a r t - t i m e farms. The a g r i c u l t u r a l a u t h o r i t i e s , i n t h e i r w i s h t o promote the l a r g e f u l l - t i m e farms w i t h the methods proposed under the second l a n d r e f o r m debate, have i n d i c a t e d t h a t they b e l i e v e t h a t a system of l a r g e f u l l - t i m e farms would r e v i v e the s e c t o r ' s growth. These farms a re assumed t o be the most p r o d u c t i v e farms i n the s e c t o r and t h i s h y p o t h e s i s i s t e s t e d i n t h i s s t u d y . F o r t u n a t e l y , we l o c a t e d an e x c e p t i o n a l d a t a s e t : the annual Farm Record Keeping F a m i l i e s s u r v e y . The data from n i n e r e c e n t (1972-80) s u r v e y s f o r fo u r major a g r i c u l t u r a l s e c t o r s of Taiwan (the N o r t h , M i d - , South r i c e and Sugar r e g i o n s ) were used. The q u a l i t y of t h i s d a t a i s b e t t e r than d a t a from most o t h e r s o u r c e s which r e l y on the memory of the f a r m e r s . In t h i s s u r v e y , farmers d a i l y r e c o r d e d a l l the household's t r a n s a c t i o n s ( i n k i n d and cash) and a c t i v i t i e s , be they f o r f a r m i n g , f o r non-farming or consumption. Thus an a n a l y s i s of t h i s d a t a c o u l d p r o v i d e a r e l i a b l e t e s t of the s u p e r i o r i t y of the l a r g e f u l l - t i m e farms and a l s o measure the l i k e l y consequences of some of the second l a n d r e f o r m p r o p o s a l s . A system of l a r g e f u l l - t i m e farms i s c o n s i d e r e d t o be s u p e r i o r t o a system of s m a l l and e s p e c i a l l y of s m a l l p a r t - t i m e farms f o r many r e a s o n s . F i r s t , l a r g e f u l l - t i m e farms a r e c o n s i d e r e d t o be more r e s p o n s i v e than s m a l l farms 174 t o changes i n the c o m p o s i t i o n of the demand f o r a g r i c u l t u r a l p r o d u c t s and the s u p p l y of new i n p u t s . The a n a l y s i s i n c h a p t e r IV shows no e v i d e n c e of t h i s g r e a t e r r e s p o n s i v e n e s s . The output c o m p o s i t i o n of s m a l l farms responded much more r e a d i l y t o the d e c l i n e i n the demand share of s t a p l e s ( r i c e and sweet p o t a t o ) than the output c o m p o s i t i o n of l a r g e f u l l - t i m e farms, except i n the N o r t h R i c e r e g i o n where the s i g n i f i c a n t l y h i g h e r paddy l a n d endowment on s m a l l farms promoted a r i c e p r o d u c t i o n s t r a t e g y on s m a l l farms. A l s o , mechanized p r o d u c t i o n and new i n t e r m e d i a t e i n p u t s , such as h e r b i c i d e s and i n s e c t i c i d e s were adopted j u s t as r e a d i l y by t h e s m a l l and s m a l l p a r t - t i m e as the l a r g e f u l l - t i m e farms. Large f u l l - t i m e farms a r e a l s o assumed t o be more ' p r o d u c t i v e ' than s m a l l and s m a l l p a r t - t i m e , farms. The a n a l y s i s i n c h a p t e r IV i n d i c a t e s o t h e r w i s e . The average l a n d p r o d u c t i v i t y , measured by the output and p r o f i t per h e c t a r e , i s s u b s t a n t i a l l y h i g h e r on s m a l l f u l l - t i m e farms than on l a r g e f u l l - t i m e farms. On s m a l l p a r t - t i m e farms b o t h o u t p u t and p r o f i t per h e c t a r e are s l i g h t l y lower than on l a r g e f u l l - t i m e farms. I n t e r e s t i n g l y , the d i f f e r e n c e i s not a m atter of c r o p p i n g i n t e n s i t y d i f f e r e n c e s as the m u l t i p l e c r o p p i n g index r e f l e c t s o n l y the c r o p m a t u r i t y l e n g t h s . I n s t e a d , t h e p r o d u c t i v i t y d i f f e r e n c e i s m a i n l y m a n i f e s t e d t h rough y i e l d d i f f e r e n c e s i n n o n - r i c e c r o p p r o d u c t i o n , w h i l e r i c e y i e l d s a r e s i m i l a r on a l l farms. So the e v i d e n c e on f a m i l y s u p p l i e d f a c t o r use i n d i c a t e s t h a t 175 s m a l l f u l l - t i m e farms use the l a n d most i n t e n s i v e l y of a l l the farm groups, by u s i n g t h e i r s u b s t a n t i a l l y h i g h e r f a m i l y l a b o u r t o l a n d endowment i n the p r o d u c t i o n of l a b o u r and s u p e r v i s i o n i n t e n s i v e c r o p s such as v e g e t a b l e s . Large f u l l - t i m e farms do not respond t o t h e i r r e l a t i v e l a c k of f a m i l y l a b o u r by h i r i n g more s e r v i c e s or u s i n g more machines per h e c t a r e , and t h e r e f o r p r o d u c t i o n per h e c t a r e i s l e s s . S m a l l p a r t - t i m e farms do respond t o t h e i r r e l a t i v e l a c k of f a m i l y l a b o u r by h i r i n g more machine s e r v i c e s per h e c t a r e than s m a l l f u l l - t i m e farms, but then produce s i m i l a r o u t p u t s as l a r g e f u l l - t i m e farms. That l a r g e f u l l - t i m e farms a r e needed because they save and then i n v e s t more than s m a l l farms i s not s u p p o r t e d by the e v i d e n c e e i t h e r . The investment per h e c t a r e , as w e l l as the farm a s s e t l e v e l per h e c t a r e and the owned machine s t o c k per h e c t a r e , a re s i m i l a r f o r a l l farms. There a r e o n l y two e x c e p t i o n s : farm investment per h e c t a r e on the s m a l l farms of the Sugar r e g i o n i s lower because l i v e s t o c k p r o d u c t i o n i s f a l l i n g on t h e s e farms, and the owned machine s t o c k per h e c t a r e i n the N o r t h R i c e r e g i o n i s lower on l a r g e f u l l - t i m e farms because they have a h i g h e r share of dry l a n d , so t h a t l e s s r i c e r e l a t e d machines a r e needed (but more i s i n v e s t e d i n t r e e s ) . The main reason c i t e d by Taiwanese p o l i c y makers i n f a v o u r of l a r g e farms i s the presence of economies of s c a l e which a r e a s s o c i a t e d w i t h the m e c h a n i z a t i o n of a g r i c u l t u r e . 1 76 The a n a l y s i s of c h a p t e r V r e f u t e s t h i s h y p o t h e s i s of i n c r e a s i n g economies of s c a l e (except i n the South R i c e r e g i o n ) ; the p r o d u c t i o n t e c h n o l o g y e x h i b i t s c o n s t a n t r e t u r n s t o s c a l e . The s c a l e economies, u s u a l l y r e l a t e d t o i n d i v i s i b i l i t y a s s o c i a t e d w i t h machines, have been a v o i d e d by the o r g a n i z a t i o n of the 'custom s e r v i c e ' market so t h a t s m a l l farms can use the mechanized methods as e f f i c i e n t l y as l a r g e farms. The t o t a l f a c t o r p r o d u c t i v i t y a n a l y s i s of c h a p t e r V p r o v i d e s some evi d e n c e t h a t p a r t - t i m e f a r m i n g l e a d s t o an i n e f f i c i e n t use of the f a m i l y f a c t o r s i n some c a s e s . These c a s e s a r e c h a r a c t e r i z e d by farms whose l a n d q u a l i t y i s dominant i n the r e g i o n (the a l l - p a d d y farms of N o r t h R i c e and M i d - R i c e and the paddy-dry mixed farms of the Sugar r e g i o n ) . T h i s e f f i c i e n c y l o s s i s p r o b a b l y the consequence of the development of e x a c t f a r m i n g methods by the a g r i c u l t u r a l r e s e a r c h e s t a b l i s h m e n t f o r these farms. F u l l - t i m e farmers can reap t h i s g a i n from o p t i m a l t i m i n g and e f f o r t , w h i l e p a r t - t i m e f a r m e r s , whose farm l a b o u r time and e f f o r t i s r e s i d u a l , cannot. However, t h e r e i s no such l o s s on the farms w i t h the o t h e r l a n d q u a l i t i e s s i n c e p r o d u c t i o n t e c h n i q u e s a r e d e f i n e d l e s s e x a c t l y , and thus t h e r e i s l e s s g a i n from h a v i n g more f l e x i b i l i t y i n the l a b o u r a p p l i c a t i o n . The p o l i c y p r o p o s a l s which impose a minimum s i z e on the farm a r e e a s i l y shown t o be c o u n t e r p r o d u c t i v e , u s i n g the a n a l y s i s i n c h a p t e r IV and V. An amalgamation of s m a l l 177 farms i n t o l a r g e farms, each o p e r a t e d f u l l - t i m e by one ho u s e h o l d , would have s u b s t a n t i a l u n d e s i r a b l e market e f f e c t s . Because of the amalgamation of s m a l l f u l l - t i m e farms, t h e r e would be a l a r g e l o s s of a g r i c u l t u r a l employment ( p r o b a b l y m o s t l y i n the c a t e g o r y of a g r i c u l t u r a l w orkers who a r e unemployable on the m a r k e t ) . T h i s l o s s of the l a b o u r r e s o u r c e would c r e a t e a s u b s t a n t i a l l o s s of p r o d u c t i o n , e s p e c i a l l y of v e g e t a b l e p r o d u c t i o n (an i n c r e a s i n g l y d e s i r e d food) and an i n c r e a s e i n r i c e p r o d u c t i o n (a s t a p l e ) . There i s l i t t l e hope t h a t the l a r g e f u l l - t i m e farms would respond t o a p o s s i b l e c o l l a p s e of the a g r i c u l t u r a l wages by h i r i n g more (and thus p r o d u c i n g more), as t h e r e has been a s u r p r i s i n g u n r e s p o n s i v e n e s s of h i r e d l a b o u r t o the r a p i d i n c r e a s e s of the a g r i c u l t u r a l wage.rate between 1972 and 1980. Because of the amalgamation of s m a l l p a r t - t i m e farms, t h e r e would be l e s s demand f o r machine and a n i m a l s e r v i c e s i n these 'custom s e r v i c e ' m a r k e t s . G e n e r a l l y , l e s s machine and i n t e r m e d i a t e i n p u t s would be used i n a g r i c u l t u r e . Thus p o l i c i e s which a r t i f i c i a l l y i n c r e a s e the number of l a r g e f u l l - t i m e farms, by imposing l a n d t h r e s h o l d s , would g r e a t l y reduce l a n d p r o d u c t i v i t y because of a g e n e r a l d e c l i n e of l a b o u r (and o t h e r i n p u t ) a p p l i c a t i o n . There would o n l y be a s l i g h t compensating improvement i n the t o t a l f a c t o r p r o d u c t i v i t y of the s t i l l employed r e s o u r c e s as t h e r e a r e no g a i n s from economies of s c a l e t o be e x p e c t e d and o n l y modest e f f i c i e n c y g a i n s from 178 the r e d u c t i o n of s m a l l p a r t - t i m e f a r m i n g . The i n v e s t i g a t i o n of the a l l o c a t i v e e f f i c i e n c y i n c h a p t e r V, and of the p r o d u c t i o n p a t t e r n s i n c h a p t e r IV, r e v e a l e d the g r e a t c o m p l e x i t y of the p r o d u c t i o n d e c i s i o n i n the Taiwanese a g r i c u l t u r a l s e c t o r . The p a t t e r n s of the average shadow p r i c e s do i n d i c a t e t h a t the farmers t r y t o e f f i c i e n t l y a l l o c a t e the r e s o u r c e s f o r which markets e x i s t . Both the i n v e s t i g a t i o n s of the average shadow p r i c e s i n each farm l a n d type and between farm groups p o i n t t o the r e l a t i v e m o b i l i t y of male l a b o u r . Thus average male l a b o u r shadow p r i c e s a re h i g h where i n d u s t r i a l employment o p p o r t u n i t i e s e x i s t and the shadow p r i c e s do not d i f f e r s i g n i f i c a n t l y between farm groups. A l s o average farm a s s e t shadow p r i c e s i n d i c a t e t h a t the dominant l a n d type farm may have more a c c e s s t o the o f f i c i a l f i n a n c i a l markets, p r o b a b l y as p a r t of the g e n e r a l a t t e n t i o n t h a t these farmers r e c e i v e from t h e a u t h o r i t i e s . However, t h e r e i s a l s o some s u g g e s t i o n t h a t both l a n d and female a r e immobile. T h i s would then mean t h a t a c c u r a t e c r o p mix d e c i s i o n s become i m p o r t a n t f o r the e f f i c i e n c y of the a l l o c a t i o n of l a n d over the h o u s e h o l d s . G e n e r a l l y , i t i s not e n t i r e l y c l e a r t h a t t a k i n g the r e s t r i c t i o n s o f f the l a n d market w i l l induce more l a n d t r a n s a c t i o n s . The low d r y l a n d shadow p r i c e s i n the r i c e r e g i o n s i n d i c a t e t h a t d r y l a n d i s h e l d f o r s p e c u l a t i v e p u r p o s e s . A l s o the o f f i c i a l l a n d r e n t i s much lower than the l a n d shadow p r i c e e xcept the N o r t h R i c e r e g i o n , which i s 1 79 why t h e r e i s no o f f i c i a l t e n a n c y . But shadow p r i c e s a r e s i m i l a r on l a r g e f u l l - t i m e and s m a l l p a r t - t i m e farms i n s i x c a s e s , and s i m i l a r on s m a l l f u l l - t i m e and s m a l l p a r t - t i m e farms i n the o t h e r c a s e s . T h i s means t h a t a r e l a x a t i o n of the l a n d market r e s t r i c t i o n s may not induce l a n d t r a n s f e r s from s m a l l p a r t - t i m e farmers t o f u l l - t i m e f a r m e r s , d e s p i t e the e v i d e n c e of some o v e r a l l ( t e c h n i c a l ) e f f i c i e n c y l o s s on p a r t - t i m e farms of the dominant l a n d t y p e . However, the l a n d shadow p r i c e s were s i g n i f i c a n t l y lower on s m a l l f u l l - t i m e than on l a r g e f u l l - t i m e farms. These l a n d shadow p r i c e p a t t e r s were i n t i m a t e l y l i n k e d t o the d i f f e r e n c e s i n female f a m i l y l a b o u r per l a n d endowments and t o the e s t i m a t e d r e l a t i o n s h i p s between l a n d and female l a b o u r . Female f a m i l y l a b o u r seems t o r e q u i r e the farm employment (whether because i t i s unemployable o f f - f a r m , or because the d i s u t i l i t y of o f f - f a r m work i s f a r above the d i s u t i l i t y of s e l f - e m p l o y m e n t ) and c o n t a i n s s e l f - s u p e r v i s i o n which i s i m p o r t a n t f o r some of the c r o p s . Thus when a s m a l l f u l l - t i m e farmer c o n s i d e r s r e n t i n g or s e l l i n g h i s l a n d , the a s k i n g - p r i c e w i l l be h i g h e r than the l a n d shadow p r i c e because b o t h the l a n d and the female employment r e t u r n s must be c o v e r e d . As t h e r e a r e no economies of s c a l e , i t i s d o u b t f u l t h a t l a r g e f u l l - t i m e farms can produce a h i g h e r l a n d r e t u r n than t h i s a s k i n g - p r i c e . Thus no t r a d e w i l l r e s u l t between s m a l l f u l l - t i m e and l a r g e f u l l - t i m e farms. These may be p a r t of the r e a s o n s why the new r e n t a l 180 arrangements such as ' c o n t r a c t f a r m i n g ' seem t o have such a d i s a p p o i n t i n g r a t e of a d o p t i o n . To c o n c l u d e , Taiwanese a g r i c u l t u r e has b e n e f i t t e d s u b s t a n t i a l l y from the u n d i s t o r t e d f u n c t i o n i n g of the markets f o r l a b o u r and o t h e r i n p u t s . The e m p i r i c a l e v i d e n c e s u g g e s t s t h a t t h e r e s h o u l d be no d e p a r t u r e from the p o l i c i e s which f a c i l i t a t e t he market p r o c e s s e s . Thus p o l i c i e s which reduce the r e s t r i c t i o n s on the l a n d market a r e recommended. The promotion of t h e new r e n t a l arrangements ( w i t h a s s u r a n c e t h a t those who r e n t w i l l not be f o r c e d t o s e l l ) and the r e l a x a t i o n of the mortgage market r e s t r i c t i o n s s h o u l d c o n t i n u e . P o l i c i e s which would impose d i f f e r e n t r e s t r i c t i o n s on the l a n d market, such as a lower l i m i t on farm o p e r a t i o n or l a n d h o l d i n g and an e n f o r c e d amalgamation, a r e c o u n t e r p r o d u c t i v e . There i s no reason why s m a l l f u l l - t i m e farms s h o u l d d i s a p p e a r as no economies of s c a l e e x i s t . Indeed t h e i r average l a n d p r o d u c t i v i t y i s much h i g h e r than on l a r g e f u l l - t i m e farms and they d i s p r o p o r t i o n a l l y produce the n o n - s t a p l e c r o p s which the p o p u l a t i o n more and more demands. The r e l a x a t i o n of the c o n s t r a i n t s on t h e t r a n s f e r of farm l a n d between farmers s h o u l d p r o v i d e t h e economic environment i n which the d e c i s i o n i s l e f t t o t h e f u l l - t i m e f a r m ers t o induce the p a r t - t i m e farmers t o l e t go of the l a n d when the gap between the r e t u r n s t o the two forms of f a r m i n g widens and when r u r a l p a r t - t i m e f a r m e r s become more c e r t a i n of c o n t i n u e d 181 n o n - a g r i c u l t u r a l employment. T h i s p r o c e s s c o u l d p o s s i b l y a l s o be f a c i l i t a t e d i f the mortgage market would be o r g a n i z e d v i a the Farmers A s s o c i a t i o n c r e d i t departments, which c o u l d p r o v i d e l o n g term f i n a n c i a l a s s e t s f o r r u r a l i n v e s t o r s (those s e l l i n g t h e i r l a n d ) . There i s an a d d i t i o n a l reason f o r p r o m o t i n g the growth of a more modern l a n d market o r g a n i z a t i o n (and a l o n g term r u r a l c r e d i t m a r k e t ) . T h i s study e s t a b l i s h e d t h a t the o r g a n i z a t i o n of f a r m i n g i s not t o blame f o r the r e c e n t s l o w e r a g r i c u l t u r a l growth. The main reason i s the steady d e c l i n e of both l a n d and l a b o u r r e s o u r c e s i n a g r i c u l t u r e due t o the demand i n c r e a s e i n the n o n - a g r i c u l t u r a l s e c t o r s . T h i s i s a p r o c e s s which w i l l c o n t i n u e t o e x p r e s s i t s e l f i n an i n c r e a s e of the number of s m a l l and p a r t - t i m e farms i n the immediate f u t u r e and a l o s s of young a g r i c u l t u r a l w orkers. However, s t a r t i n g i n f i v e - t e n y e a r s , the r e s o u r c e l o s s may become ac u t e when the p r e s e n t g e n e r a t i o n of o l d e r immobile f u l l - t i m e f a r m i n g workers s t a r t s t o d i s a p p e a r t o o . The adjustment of a g r i c u l t u r e and i t s farm o r g a n i z a t i o n t o t h i s s i t u a t i o n w i l l be much f a c i l i t a t e d i f a w e l l e s t a b l i s h e d and f u n c t i o n i n g modern l a n d and r u r a l l o n g term c r e d i t market e x i s t s by t h a t t i m e . I f the i n i t i a t i v e towards a new l a n d market o r g a n i z a t i o n i s taken now, t h e r e i s time t o experiment and t o f i n d the s t r u c t u r e s which work best i n Taiwan. 1 82 BIBLIOGRAPHY Taiwan: Land Chen Cheng, 1961, Land r e f o r m i n Taiwan, T a i p e i , China p u b l i s h i n g C o . 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A , V120 n3, p253-8l Forsund F.R., L o v e l l C.A.K., Schmidt P., 1980, A survey of f r o n t i e r p r o d u c t i o n f u n c t i o n s and of t h e i r r e l a t i o n s h i p t o e f f i c i e n c y measurement, J o u r n a l of E c o n o m e t r i c s , V113 n1, May, G r i l i c h e s Z., 1957, S p e c i f i c a t i o n b i a s i n e s t i m a t e s of p r o d u c t i o n f u n c t i o n s , J o u r n a l of Farm Economics, v39, p8-20 G r i l i c h e s Z., 1960, M e asuring i n p u t s i n a g r i c u l t u r e : a c r i t i c a l s u r v e y , J o u r n a l of Farm Economics, v62, Dec, G r i l i c h e s Z., 1963, E s t i m a t e s of the aggregate a g r i c u l t u r a l p r o d u c t i o n f u n c t i o n form c r o s s - s e c t i o n a l d a t a , J o u r n a l of farm Economics, v65, May, p4l9-28 G r i l i c h e s Z., 1963, The s o u r c e s of measured p r o d u c t i v i t y growth i n the US a g r i c u l t u r e 1940-60, J o u r n a l of P o l i t i c a l Economics, v71 n4, Aug, p331-46 Hoch I . , 1958, S imultaneous e q u a t i o n b i a s i n the c o n t e x t of Cobb-Douglas p r o d u c t i o n f u n c t i o n s , E c o n o m e t r i c a , v24 n4, p566-78 Herdt R.W., Mandoc A.M., 1981, Modern t e c h n o l o g y and economic e f f i c i e n c y i n P h i l i p p i n e r i c e f a r m e r s , Economic Development and C u l t u r a l Change, v29 n2, J a n , p375-400 Kopp R.J., 1980, The measurement of p r o d u c t i v e e f f i c i e n c y : a r e c o n s i d e r a t i o n , Q u a r t e r l y J o u r n a l of Economics, v96 n3, Aug, p477-503 Lau L . 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J . , 1973, A t e s t f o r r e l a t i v e e f f i c i e n c y : some f u r t h e r r e s u l t s , American Economic Review, v61 n1, March, p94-l09 Z e l l n e r , Kmenta, Dreze, 1966, S p e c i f i c a t i o n and e s t i m a t i o n of Cobb-Douglas p r o d u c t i o n f u n c t i o n models, E c o n o m e t r i c a , v34 n4, Oct, p784~885 S e c t o r i a l d a t a PDAF, a g r i c u l t u r a l yearbooks P Foodbureau, Food p r o d u c t i o n i n Taiwan (annual) r i c e r e v i e w magazine Taiwan economic a b s t r a c t (annual) DGBAS, p r i c e s and p r i c e i n d i c e s (annual) s t a t i s t i c a l yearbook of Taiwan (annual) 1 90 JCRR (CAPD), annual r e p o r t s CAFC, the r e p o r t of a g r i c u l t u r a l census of Taiwan-Fukien d i s t r i c t of the R e p u b l i c of C h i n a (1960, 1970, 1975, 1980) p r o d u c t i o n d a t a , p r i c e d a t a , n a t i o n a l l a n d a l l o c a t i o n d ata e t c . 191 APPENDIX A PRICES AND LAND PRODUCTIVITY MEASURES A. INTRODUCTION In t h i s appendix a more d e t a i l e d e x p l a n a t i o n of some of the v a r i a b l e s which were used i n t h i s s tudy i s p r o v i d e d . In s e c t i o n B, the p r i c e s as used i n t h i s s tudy are e x p l a i n e d , and i n s e c t i o n C, the s i m p l e p r o d u c t i v i t y measures which were d i s c u s s e d in., c h a p t e r IV a r e d e f i n e d i n d e t a i l . B. PRICES, PRICE DEFLATORS We use s e v e r a l p r i c e d e f l a t o r s i n t h i s s t u d y . Some of the d e f l a t o r s a re taken from the n a t i o n a l p r i c e i n f o r m a t i o n and some have been c o n s t r u c t e d . B.1 I n d i v i d u a l commodity group p r i c e s The n a t i o n a l p r i c e index i n f o r m a t i o n d i d not f u l l y c o r r e s p o n d w i t h the c a t e g o r i e s of the h o u s e h o l d d a i l y r e p o r t d a t a , so t h a t we c o n s t r u c t e d i n d i c e s f o r s e v e r a l commodity groups. I f the n a t i o n a l p r i c e d a t a d i d c o r r e s p o n d t o our sample c a t e g o r y then we used the n a t i o n a l p r i c e i n d e x . 192 The p r i c e i n d i c e s were c a l c u l a t e d from n a t i o n a l commodity p r i c e i n f o r m a t i o n and the shares of the commodities i n the n a t i o n a l a g r i c u l t u r a l p r o d u c t i o n of the subgroup, u s i n g the F i s h e r I d e a l p r i c e i n d e x . We had t o c a l c u l a t e a p r i c e index f o r : - c e r e a l s : sorghum, c o r n , K a o h l i a n g , wheat - s p e c i a l c r o p s : t e a , peanut, sesame, c a s s a v a - f r u i t : a l l f r u i t s except the c i t r u s f r u i t s (26 t y p e s ) - orange: a l l c i t r u s f r u i t s (5 t y p e s ) - v e g e t a b l e s : a l l v e g e t a b l e s (38 t y p e s ) - beans: a l l bean t y p e s (5 t y p e s ) - p o u l t r y : c h i c k e n , duck, t u r k e y and o t h e r . We used these c a l c u l a t e d p r i c e d e f l a t o r s and the n a t i o n a l p r i c e i n d i c e s t o c o n s t r u c t a net p r o f i t index (used i n c h a p t e r s f o u r and f i v e ) so t h a t we c o u l d c a l c u l a t e r e a l p r o f i t and a l s o q u a n t i t y i n d i c e s f o r the above commodity groups (used i n c h a p t e r f o u r ) . B.2 The index of Net P r o f i t ( V a lue added t o the f a m i l y s u p p l i e d f a c t o r s ) We c o n s t r u c t e d an index f o r the net p r o f i t , or net r e t u r n s t o the f a m i l y s u p p l i e d f a c t o r s of p r o d u c t i o n (see c h a p t e r f i v e ) . The index i s a F i s h e r I d e a l Index and i s based on the p r o f i t s h a r e s of o u t p u t s and v a r i a b l e i n p u t s c a l c u l a t e d from the t o t a l sample (2274 o b s e r v a t i o n s : around 250 193 o b s e r v a t i o n s per y e a r ) , and t h e p r i c e s of these commodity groups. T h i s index i s used i n c h a p t e r s f o u r and f i v e , t o d e f l a t e the net p r o f i t (or v a l u e added) the v a r i a b l e c o s t s and the output v a l u e and i s r e p o r t e d i n t a b l e A.1. B.3 The index of Farm Asset P r i c e s We c o n s t r u c t e d an i n d e x f o r the farm a s s e t s t o c k . The index i s a F i s h e r I d e a l i n d e x , based on sample sh a r e s of the farm a s s e t s i n the t o t a l farm a s s e t s t o c k v a l u e , and u s i n g n a t i o n a l p r i c e i n d i c e s . The farms a s s e t s a r e : l i v e s t o c k , t o o l s , machines, t r e e s , s t o r e d produce and farm s u p p l i e s . We used the f r u i t p r i c e index as a r e a s o n a b l e a p p r o x i m a t i o n f o r the v a l u e changes, through the y e a r s , of t r e e s ; f o r each of the other' a s s e t s t h e r e was a n a t i o n a l p r i c e i n d e x . The c a l c u l a t e d farm a s s e t p r i c e i s r e p o r t e d i n t a b l e A.1. B.4 M i s c a l e n e o u s p r i c e s The i n t e r e s t r a t e s were c a l c u l a t e d as a w e i g h t e d average of the o f f i c i a l a g r i c u l t u r a l i n t e r e s t r a t e s [JCRR, annual r e p o r t e d i n t e r e s t r a t e s f o r a g r i c u l t u r a l l o a n s (weight 75%)] and market ( p r i v a t e ) i n t e r e s t r a t e s [DGBAS, p r i c e s r e c e i v e d and p a i d (weight 2 5 % ) ] . The c a l c u l a t e d i n t e r e s t r a t e i s r e p o r t e d i n t a b l e A . l . 1 94 The p r i c e which gave us the most problems was the l a n d r e n t a l p r i c e because of the v i r t u a l n o n - e x i s t e n c e of a l a n d r e n t a l market (see c h a p t e r two). Because of t h i s we had t o c o n s t r u c t a v e c t o r of p o s s i b l e o f f i c i a l r e n t a l p r i c e s . There i s an o f f i c i a l r e n t a l p r i c e quoted s i n c e 1976, and we a l s o found one o b s e r v a t i o n f o r the l a n d r e n t i n 1969 (JCRR 1970). We assumed f o r 1969 t o 1972 t h a t the same 1969-amount of r i c e per h e c t a r e (59.2 kg/ha) was p a i d f o r r e n t , w h i l e f o r the p e r i o d 1973 t o 1976, t h a t the r e n t was the 1976 amount of 47.36 kg/ha. (The government changed i t s a g r i c u l t u r a l p o l i c i e s i n 1973, when the s e c t o r e x p e r i e n c e d s t r e s s ) . The o f f i c i a l r i c e p r i c e s were then used t o c a l c u l a t e the r e n t a l v a l u e . The r e s u l t a n t o f f i c i a l l a n d r e n t a l p r i c e s a r e r e p o r t e d i n t a b l e A.1. The l a b o u r wages were a v a i l a b l e i n the n a t i o n a l s t a t i s t i c s (DGBAS, p r i c e s p a i d and r e c e i v e d by f a r m e r s ) . The wages as p a i d t o the h i r e d l a b o u r i n the sample c o u l d be c a l c u l a t e d from the l a b o u r c o s t r e p o r t e d and the amounts of h i r e d l a b o u r . These wages i n the sample c o r r e s p o n d e d c l o s e l y t o the male a g r i c u l t u r a l wage r a t e . T h i s suggest t h a t l a b o u r i n the sample was indeed h i r e d a t the a g r i c u l t u r a l wage r a t e s . The a g r i c u l t u r a l wage r a t e i s r e p o r t e d i n t a b l e A.1. The machine s e r v i c e c o s t and the a n i m a l s e r v i c e c o s t were not a v a i l a b l e b e f o r e 1976. A f t e r 1976 they c o u l d be found i n DGBAS, P r i c e s p a i d and r e c i e v e d by f a r m e r s . Thus 1 95 Ta b l e A.1: SELECTED PRICES USED IN THIS STUDY LAND MALE FEM CAP MACH ANIM PROFIT ASSET RENT WAGE WAGE COST SERV SERV INDEX INDEX per per per per per per HA DAY DAY $ HA DAY ( 1 ) (2) (3) (4) (5) (6) (7) (8) NT$ NT$ NT$ % NT$ NT$ 1 972 8466 78 54 1 5 1 1 50 88 39 48 1 973 1 0332 101 73 16 1510 1 07 51 48 1 974 1 371 2 171 1 19 20 1870 175 70 71 1975 1 5332 195 1 39 19 2230 198 84 89 1 976 1 6098 213 1 55 1 7 2590 1 97 76 78 1977 1 3050 213 1 55 16 2627 207 71 80 1978 1 0370 256 1 78 1 5 3293 202 78 87 1 979 1 0370 298 217 1 6 3527 274 89 89 1979 1 0370 383 280 18 4593 346 1 00 1 00 Notes: (1) c o n s t r u c t e d a n n u a l l a n d r e n t per ha (2) s o u r c e : DGBAS, p r i c e s p a i d and r e c e i v e d (3) s o u r c e : " " " " " by farmers (4) c o n s t r u c t e d i n t e r e s t c o s t per NT$ (5) c o n s t r u c t e d machine s e r v i c e c o s t per ha (6) c o n s t r u c t e d a n i m a l s e r v i c e c o s t per day (7) c o n s t r u c t e d p r o f i t index (8) c o n s t r u c t e d farm a s s e t index the e a r l i e r s e r v i c e p r i c e s were c a l c u l a t e d from p r i c e s r e p o r t e d i n JCRR (annual r e p o r t s ) i n some of the a r t i c l e s on c o s t s i t u a t i o n s of the far m e r s (thus on the bases of s u r v e y s ) , but not a l l y e a r s were a v a i l a b l e . Where a year was l a c k i n g , an average was c a l c u l a t e d between the a v a i l a b l e o b s e r v a t i o n s . The r e s u l t a n t machine and a n i m a l s e r v i c e p r i c e s a r e r e p o r t e d i n t a b l e A.1. The machine s e r v i c e c o s t per ha r e f e r s t o the c o s t of one s e r v i c e (such as t r a n s p l a n t i n g , or h a r v e s t i n g ) d e l i v e r e d on one h e c t a r e l a n d . 196 C. LAND PRODUCTIVITY MEASURES C.1 The m u l t i p l e c r o p index The m u l t i p l e c r o p index i s the amount of l a n d cropped ( g r o s s ) per c u l t i v a t a b l e h e c t a r e and approximates the i n t e n s i t y of l a n d use i f a l l a v a i l a b l e c r o p s have the same l e n g t h of m a t u r i t y (so t h a t p e r i o d s of l a n d f a l l o w w i l l be the o n l y source of m u l t i p l e c r o p index v a r i a t i o n ) . T h i s assumption i s p r o g r e s s i v e l y becoming l e s s a p p l i c a b l e f o r Taiwan where the farmers have an i n c r e a s i n g range of c r o p c h o i c e s w i t h v a r y i n g l e n g t h of l a n d o c c u p a t i o n ( f r u i t s , s ugar: f u l l y e a r ; r i c e 1 : one season; r i c e 2: one season; sweet p o t a t o : two seasons; e t c . ) . The d e f i n i t i o n of the m u l t i c r o p index i s : MC = (Z S 4 f ) / S S 4 i l a n d put i n t o c r o p i S c u l t i v a t a b l e a rea There i s no c o r r e c t i o n f o r the q u a l i t y of the l a n d i n t h i s measure of the c u l t i v a t a b l e l a n d (Sen d e f i n i t i o n ) , nor i n the measure of the cropped l a n d S4, which i s the sum of la n d s used f o r each c r o p (Rudra d e f i n i t i o n ) . Thus d o u b l e - t r i p l e usage of a p h y s i c a l p i e c e of l a n d i s p o s s i b l e and counted by the m u l t i p l e c r o p i n d e x . 1 97 C.2 R i c e y i e l d s The r i c e y i e l d i s the h a r v e s t of r i c e per h e c t a r e put t o r i c e , and measures the t e c h n i c a l a b i l i t y of the farm t o produce r i c e . Two r i c e seasons e x i s t i n Taiwan, w i t h the January-May season u s u a l l y p r o d u c i n g h i g h e r y i e l d s than the June-October season. The r i c e y i e l d s a re d e f i n e d a s : RYt = H ( R t ) / S 4 ( R t ) H(Rt) : r i c e h a r v e s t i n p e r i o d t S 4 ( R t ) : r i c e l a n d i n p e r i o d t RYt : r i c e y i e l d i n p e r i o d t t = 1 ,2 Only farmers who produce r i c e were cou n t e d . C.3 N o n - r i c e c r o p v a l u e y i e l d The n o n - r i c e c r o p v a l u e y i e l d i s the t o t a l income from a l l n o n - r i c e c r o p s per cropped h e c t a r e 1 . The l a n d i s counted t w i c e or more i f i t produced two or more n o n - r i c e h a r v e s t s d u r i n g the y e a r . The n o n - r i c e y i e l d s a re d e f i n e d a s : OVY = Z p i y i / Z S 4 i P j : p r i c e of c r o p i y j : h a r v e s t of c r o p i S 4 j : l a n d put t o c r o p i OVY: o t h e r v a l u e y i e l d 198 The t o t a l n o n - r i c e c r o p v a l u e was not d e f l a t e d so t h a t the time t r e n d i n c l u d e s the p r i c e t r e n d . The l a n d measures were not c o r r e c t e d f o r f e r t i l i t y because p a r t of the e f f i c i e n t use of l a n d s h o u l d be the a p p r o p r i a t e c r o p c h o i c e s f o r the l a n d q u a l i t i e s . C.4 The output per h e c t a r e The output per h e c t a r e i s the sum of a l l the f a r m i n g incomes per e q u i v a l e n t h e c t a r e a v a i l a b l e t o the farmer. T h i s i s the most o f t e n quoted measure of l a n d p r o d u c t i v i t y . The output v a l u e was d e f l a t e d by the p r o f i t p r i c e d e f l a t o r * t o make i t comparable t o the p r o f i t per h e c t a r e measure (so t h a t output per h e c t a r e minus p r o f i t per h e c t a r e g i v e s the v a r i a b l e c o s t per h e c t a r e i n t h i s r e p o r t i n g ) . T h i s output v a l u e has been d i s c u s s e d i n d e t a i l i n the p r e v i o u s c h a p t e r , but the main r e s u l t s a r e r e p e a t e d h e r e . C.5 P r o f i t per h e c t a r e The p r o f i t per h e c t a r e i s the v a l u e of output minus v a r i a b l e c o s t s ( i n c l u d i n g h i r e d forms of l a b o u r ) per e q u i v a l e n t h e c t a r e s and d e f l a t e d w i t h the p r o f i t d e f l a t o r " . T h i s measure t a k e s account of v a r i a b l e c o s t s as w e l l as o u t p u t s and a l s o shows the net r e t u r n t o the farmer from a l l the s e l f - s u p p l i e d i n p u t f a c t o r s . 1 99 C.6 Farm investment and s a v i n g s per h e c t a r e Bardhan (1973) argued t h a t the advantage of h a v i n g l a r g e farms might be t h e i r h i g h e r l e v e l s of investment and s a v i n g s e f f o r t . The farm investment e f f o r t i n a l l farm a s s e t s per h e c t a r e of e q u i v a l e n t l a n d i s c a l c u l a t e d from the b a l a n c e s h e e t s and the s a v i n g s e f f o r t per h e c t a r e i s a l s o g i v e n . These v a l u e s were d e f l a t e d w i t h the index of consumer p r i c e s p a i d by the farmers v as the best a p p r o x i m a t i o n to a common d e f l a t o r t h a t would be a p p r o p r i a t e f o r both the investment and the s a v i n g s amounts. The investment and the s a v i n g s per h e c t a r e a r e : INV/ha = [ I p j ( t ) v i ( t ) - Zpj.(t-1 )v.j[(.t-1 ) ] / S ( t ) SAV/ha = [ F I ( t ) + N F l ( t ) - C ( t ) ] / S ( t ) p ( t ) v ( t ) : v a l u e of a farm a s s e t a t end of year t FI : farm income NFI: non farm income C : consumption S ( t ) : e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a The d i f f e r e n c e between investment and s a v i n g i s the amount of s a v i n g s t h a t i s spent on consumer a s s e t s and i s t h u s an i n d i c a t i o n of the r e l a t i v e w i l l i n g n e s s t o i n v e s t i n the farm a c t i v i t y by the h o u s e h o l d . 2 0 0 APPENDIX B INFORMATION FOR CHAPTER II - Growth rates of production in s p e c i f i c a g r i c u l t u r a l crops (table B.1) - A g r i c u l t u r a l exports (table B.2) - Labour market situation (table B.3) - Farm machine stock (table B.4) - Farm"machine stock by size (table B.5) - Patterns of emigration-immigration into agriculture (table B.6) and comments Table B.1: GROWTH RATES OF PRODUCTION IN SPECIFIC AGRICULTURAL CROPS 1960 Amount Index 1968 Amount Index 1972 1976 1980 Amount I ndex Amount I ndex Amount I ndex R 1 ce (brown) 0 HA P 1912018 766409 81 120 2518014 789906 107 124 2440329 741570 5.95 104 116 33 27 12985 786343 12 . 96 1 15 123 72 2351824 639151 18 .07 100 100 100 MT ha NT$ Sweet Potatoe 0 HA P 2978676 235387 282 378 3444619 240316 326 386 2927708 210609 .973 277 338 38 1850992 123735 1 . 790 175 199 70 1055134 62255 2 . 570 100 100 100 MT ha NT$ Sugar Cane 0 HA P 792132 95543 94 90 886127 95902 102 91 732939 90329 .317 87 86 40 814493 1094 11 . 664 96 103 84 845825 107200 . 795 100 100 100 MT ha NT$ Bananas 0 HA P 104216 12709 49 137 645467 43806 301 473 3664 1 1 22830 2 . 390 171 246 38 213446 1 1 152 4 . 320 100 120 68 214323 9268 6 . 370 100 100 100 MT ha NT$ P1neapple Q HA P 166730 9746 73 133 311364 1 1842 136 161 334384 13128 1 . 327 146 179 28 278830 9706 2. 749 122 132 58 228804 7352 4 . 740 100 100 100 MT ha NT$ C 1 trus 0 HA P 52866 8099 14 25 175578 19138 47 59 290609 26010 3 . 592 78 80 40 383972 33682 5. 123 103 103 57 374383 32696 9 .066 100 100 100 MT ha NT$ Vegetables 0 HA P 802801 91601 25 39 1209293 . 118462 37 51 1703663 148557 21 .85 52 64 69 2446282 191966 18 . 92 75 82 59 3260921 233941 31.81 100 100 100 MT ha NT$ A l l F r u i t s * 0 HA. P 1261628 109584 3 .039 78 84 34 1373523 122728 5 . 320 85 95 59 1615558 129869 9.031 100 100 100 MT ha NT$ Source: PDAF Agricultural Yearbooks Note:0 : quantity (metric ton: MT) HA: land area (hectare) P p r i c e per kg (average over a l l prefectures) * : included bananas and pinapples T a b l e B.2: AGRICULTURAL EXPORTS: AGRICULTURAL PRODUCTS Fres h F ru i t Banana V e g e t a b l e s T o t a l V a l u e % i n E x p o r t s Value Pr i ce % Value Pr i ce % Va 1 ue Pr i c e % X 1000NTS X 1000NT$ per kg X 1000NT$ per kg X 1000NTS per kg 1972 5683686 4.87 588984 5 . 20 .51 1210874 5.26 1 .04 363748 4 . 54 .31 1974 6448910 3.08 461674 9.23 . 22 744667 5.18 . 36 406089 6.85 . 19 197S 12981394 4 . 19 447062 9.30 . 15 721496 8 .43 . 23 902360 8 . 72 . 29 1978 15777698 3 . 37 527622 12 . 49 . 1 1 647834 7 . 99 . 14 1457462 10. 85 .31 1979 1565821 1 2 . 70 499372 1 1 . 35 .09 892377 8 . 72 . 15 1 139137 9 . 19 .20 AGRICULTURAL EXPORTS: FOODS ( c o n t i n u e d ) Canned P i n e a p p l e Canned Mushroom Canned Asparagus T o t a l V a lue X 1000NTS % i n E x p o r t s Value X 1000NT$ Pr i ce* per kg % Value X 1000NTS Pr i c e * per kg % Va 1 ue - X 1000NTS Pr i c e * per kg % 1972 12491731 10. 71 694370 8.84 .60 2219869 35.09 1 .90 1658221 23 . 64 1 .42 1974 24120072 1 1 . 50 784826 17.13 . 37 1709910 35 . 02 .82 3226883 46 .56 1 . 54 1976 25498486 8.23 537566 19.37 . 17 2205416 43 .04 .71 3788703 47 .97 1 .22 1978 35257743 7 . 53 352060 23 .08 .08 3992581 53.62 .85 4206367 50. 25 .90 1979 39226568 ' 6 . 77 608051 21 .32 . 10 3277943 48.81 .57 3966407 57 . 33 .68 R i c e Sugar Value X 1000NTS P r i c e * per kg % Value X 1000NTS Pr i c e * per kg % 1972 74535 4.61 .07 3339144 6.85 2 .86 1974 49860 9.71 .02 11387824 20.66 5 . 43 1976 490 14.41 0 5931413 11.51 1 .92 1978 1961969 8 . 25 . 42 2565930 7 . 26 . 55 1979 3113020 7.61 .54 2969648 7 . 72 .51 Source: Taiwan Economics S t a t i s t i c s ( I n d u s t r y of Free China, Vol L111, n 5) 1980 Note: %: p e r c e n t i n the t o t a l export of Taiwan ( a g r i c u l t u r a l + i n d u s t r i a l ) *: c a l c u l a t e d as ( v a l u e / w e i g h t ) ro o ro T a b l e B.3: LABOUR MARKET SITUATION P o p u l a t i o n T o t a l % T o t a l % Employed % Employed % Employed Males Employed Females Employed Employable Employed Employed Agr i c u l t u r e A g r 1 c u l t u r e Agr i c u l t u r e Agr i c u 1 t u r e Agr i c u 1 t u r e X 1000 X 1000 Ma 1 e Fema1e X 1000 X 1000 (1) (2) (3) (4) (5) (6) (7) (8) 1960 5687 3344 63 56 51 74 1341 537 1968 7333 4337 64 49 45 62 1466 677 1972 8699 5812 72 40 36 50 1464 846 1976 9828 6837 76 35 32 40 1503 862 1980 1098 1 7797 79 29 28 29 144 7 757 Manufacture Agr1cu1ture Monthly Monthly Average Wage Monthly Monthly Average Constant Agr i c u 1 t u r e Constant Income Workdays Wage Farm/Man Income Workdays Wage GDP % GDP A g r i . GDP X 10 6 X 10 6 (9) (10) (11) (12) (13) (14) (15) ( 16) (17) (18) 1960 621 30.6 20. 3 1 . 73 540 15 . 4 35 .03 161021 29 46696 1968 1232 31 .0 39.7 1 . 28 829 16.3 50.99 3331 19 19 63293 1972 1990 28.4 70. 1 1.11 • 1276 16.3 78 . 13 515724 12 61887 1976 4707 27.9 144 . 5 1 . 34 2942 15.2 193.98 701117 1 1 77123 1980 9198 27 .6 333 .0 1.15 6515 17.0 383.24 1004613 8 80369 DGBAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) (15) (16) (17) (18) S t a t i s t i c a l Yearbook p o p u l a t i o n o v e r 15 years o l d and not e n r o l l e d 1n s c h o o l s (household r e g i s t r a t i o n data) g a i n f u l l y employed p o p u l a t i o n ( l a b o u r survey data) employment r a t e when o l d p e o p l e a r e deducted (men +65, women +60) too (") employment i n a g r i c u l t u r e as percentage of employed ( c a l c u l a t e d ) employment i n a g r i c u l t u r e as percentage of employed: males (") employment i n a g r i c u l t u r e as p e rcentage of employed: females (") males employed i n a g r i c u l t u r e (") females employed i n a g r i c u l t u r e (") manufacture: monthly income (") manufacture: workdays (monthly hours d i v i d e d by 8) (") manufacture: average d a i l y wage: (9)/(10) (") wage of f a r m i n g over m a n u f a c t u r i n g wage . (") f a r m i n g : monthly income: (14) X (13) (") f a r m i n g : monthly workdays ( t o t a l annual workdays In fa r m i n g d i v i d e d by 12 times the number of workers) (Chen, Wang, 1980) f a r m i n g : wage " (DGBAS, Commodity P r i c e S t a t i s t i c s , p r i c e s p a i d by f a r m e r s ) g r o s s d o m e s t i c product i n c o n s t a n t v a l u e (GDP) (1976 p r i c e = 100) (DGBAS, S t a t i s t i c a l yearbook) a g r i c u l t u r a l domestic product as percentage of GDP (") g r o s s a g r i c u l t u r a l domestic product i n c o n s t a n t v a l u e (GDP) (") ro o oo T a b l e B.4: FARM MACHINE STOCK ( u n i t s ) Number of Power Power Water R i c e R i c e Rice Pedal Power Households T i l l e r Sprayer Pump T r a n s p l a n t e r Combine Dryer T h r e s h e r T h r e s h e r 1960 785592 3239 317 8378 1968 877114 12517 12901 49310 1972 879526 24400 25309 65755 1976 870787 46084 37489 123645 1980 872267 65745 50656 141242 (1) (2) (3) (4) 177338 201706 na 658 154 361 196637 na 6538 2487 8413 128232 30470 32581 13745 29109 na 35103 (5) (6) (7) (8) (9) (1) number of households i n v o l v e d i n a g r i c u l t u r e (PDAF A g r i c u l t u r a l Yearbooks) (2) -(9) PDAF A g r i c u l t u r a l Yearbooks, Peng (1980) T a b l e B.5: FARM MACHINE STOCK. BY SIZE (per 100 Households) S i z e T i 1 l e r Combine . Tra n s p 1 a n t e r Dryer -1 ha 6.27 . 39 . 36 1.61 1-2 ha 20. 79 2 . 56 4 . 57 5 . 45 2+ ha 24 .05 4 . 50 9.60 7.91 Source: A g r i c u l t u r a l Census, 1980 205 Comments t o T a b l e B.6 The e x a m i n a t i o n of the l a b o u r f l o w s t o and from a g r i c u l t u r e by age, shows t h a t o n l y the agegroups from 20 t o 44 respond t o the r e l a t i v e p r o d u c t i v i t y l e v e l s i n a g r i c u l t u r e and i n d u s t r y . The m i g r a t i o n p a t t e r n s of the age groups show t h a t s t r u c t u r a l p r o c e s s e s can be a s s o c i a t e d w i t h each age group, but o n l y the age groups from 20 t o 44 respond t o r e l a t i v e economic c o n d i t i o n s i n the n o n - a g r i c u l t u r a l s e c t o r , a) The number of young e n t r a n t s ( t h o s e between 15 and '19 y e a r s o l d ) i n t o the a g r i c u l t u r e has d e c l i n e d s t e a d i l y . T h i s i s p a r t i a l l y the r e s u l t of the i n c r e a s i n g e n r o l l m e n t i n s e n i o r l e v e l s c h o o l i n g . More s c h o o l i n g r e p l a c e s the w a i t i n g p e r i o d f o r employment which used t o be spend w o r k i n g on the home farm. b) F i v e y e a r s a f t e r e n t r a n c e many have found n o n - a g r i c u l t u r a l employment, c) Another f i v e y e a r s l a t e r some males have r e t u r n e d t o a g r i c u l t u r e , w h i l e females have c o n t i n u e d t o l e a v e . Some males, a f t e r e x p e r i e n c e w i t h the n o n - a g r i c u l t u r a l s e c t o r , d e c i d e t h a t a g r i c u l t u r e i s t h e i r c h o i c e . The females a r e s t a r t i n g f a m i l i e s and thus l e a v e the work f o r c e , d) Another f i v e y e a r s l a t e r t h e r e i s f u r t h e r seapage away from a g r i c u l t u r e t o n o n - a g r i c u l t u r e • w h i c h c o n t i n u e s f o r the age groups u n t i l 44. P r o c e s s e s b, c, d a r e i n f l u e n c e d by the r e l a t i v e a t t r a c t i v e n e s s of the a g r i c u l t u r a l s e c t o r . The p e r i o d l e a d i n g t o 1977 saw a slow n o n - a g r i c u l t u r a l s e c t o r growth because of t h e o i l c r i s i s w h i l e on the o t h e r hand m e c h a n i z a t i o n was r a p i d l y s p r e a d i n g i n the a g r i c u l t u r e and made i t more p r o d u c t i v e . The r e s u l t was l e s s o u t f l o w i n p r o c e s s b, more i n f l o w i n c, and the r e v e r s a l of the o u t f l o w i n p r o c e s s d compared t o the f l o w between the f i v e y e a r s l e a d i n g t o 1972 and the y e a r s l e a d i n g t o 1982. e) B e f o r e the m e c h a n i z a t i o n e x p a n s i o n between 1972 and 1977, the people between 40 and 44 y e a r s o l d c o n t i n u e d t o work i n a g r i c u l t u r e d u r i n g the next f i v e y e a r s of t h e i r l i f e ( s i m i l a r l y f o r the 45-9 age g r o u p ) , d) Loss of l a b o u r f o r c e because of r e t i r e m e n t s t a r t e d f o r people of 50-4 as f i v e y e a r s l a t e r fewer workers are l e f t i n the 55-9 b r a c k e t ( s i m i l a r f o r the o l d e r age groups) In the m e c h a n i z a t i o n e x p a n s i o n p e r i o d however, a l o t of p e o p l e l e f t the a g r i c u l t u r a l s e c t o r of those over 40 y e a r s o l d . T h i s can not be a t t r i b u t e d t o a f l o w t o the n o n - a g r i c u l t u r a l s e c t o r s i n c e t h a t s e c t o r was d e p r e s s e d . T h i s means t h a t m e c h a n i z a t i o n seems t o have l e d t o e a r l y r e t i r e m e n t f o r a l o t of f a r m e r s . T a b l e B . 6 : PATTERNS OF EMIGRATION-IMMIGRATION INTO AGRICULTURE (1000 p e r s o n s ) numbers of e m p l o y e d i n the age b r a c k e t Age Employed Year Sex 15-9 20-4 25-9 30-4 35-9 40-4 45-9 50-4 55-9 60-4 65+ 1967 •M 161 85 164 171 162 120 105 91 59 32 15 1 168 F 140 72 64 69 67 55 45 24 • 12 4 2 554 1972 M 122 74 102 135 148 154 121 106 76 28 8 1076 F 108 72 46 60 79 79 57 35 18 2 1 556 1977 M 95 85 107 102 142 164 138 102 90 56 10 1091 F 51 50 38 51 70 82 62 43 24 7 0 478 1982 M 40 59 103 87 81 1 14 1 19 125 103 81 25 936 F 18 24 33 43 44 59 70 61 43 19 2 4 16 f l o w between f i v e y e a r s Age E m i g r a t i o n Employed Employment Per i od Sex 15-9 20-4 25-9 30-4 35-9 40-4 45-9 50-4. • 55-9 60-4 65+ Beg i n End Change 1967-72 M 122 -87 17 -29 -23 -8 1 1 - 15 -31 -24 -15 -213 1168 —> 1076 -92 F 108 -68 -26 -4 10 12 2 - 10 -6 - 10 -3 -2 - 105 554 —> 556 2 1972-77 M 95 -37 33 0 7 16 - 16 -19 - 16 -20 -18 -8 -78 1076 —> 1091 15 F 51 -58 -34 5 10 3 - 17 -14 -11 - 1 1 -2 - 1 -130 556 —> 478 -78 1977-82 M 40 -36 18 -20 -21 -28 -45 -13 1 -9 -31 - 10 -194 1091 —> 936 -155 F 18 -27 -17 5 -7 - 1 1 -12 - 1 0 -5 -5 0 -90 478 —> 416 -62 b a s e d on DGBAS l a b o u r s u r v e y d a t a : Numbers of w o r k e r s employed i n a g r i c u l t u r e by age and sex ( v a r i o u s i s s u e s of the s t a t i s t i c a l y e a r b o o k ) A c o h o r t c a n be t r a c e d from 1976 to 1982: 1967: 161 newly employed 15-9 y e a r s o l d (161 male e n t r a n t s i n t o the s e c t o r ) 1972: 74 s t i l l employed but now 20-5 y e a r s o l d (87 l e f t the s e c t o r between 1967 and 1972) 1977: 107 a g a i n employed but now 25-9 y e a r s o l d (33 r e t u r n e d to the s e c t o r between 1972 and 1977) 1982: 87 s t i l l employed but now 30-4 y e a r s o l d (20 l e f t the s e c t o r between 1977 and 1982) 207 APPENDIX C INFORMATION FOR CHAPTER I I I a. L i s t of v a r i a b l e s i n the D a i l y Record Keeping F a m i l y Survey Source: P r o v i n c i a l department of a g r i c u l t u r e and f o r e s t r y , Farm r e c o r d k e e p i n g r e p o r t ( a n n u a l l y ) , on tape f l o w d a t a farm expenses: Seed F e r t i l i z e r R e q u i s i t e ( u n t i l 1977 i n c l u d e d h e r b i c i d e s ) H e r b i c i d e I n s e c t i c i d e R e n t a l c o s t ( u n t i l 1977 i n c l u d e d machine c o s t ) o t h e r d i r e c t c o s t s B u i l d i n g T o o l Water charge Other i n d i r e c t c o s t s L i v e s t o c k Feed H i r e d human H i r e d animal H i r e d machine Other I n t e r e s t c o s t (farm a s s e t c o s t ) Land r e n t a l ( l a n d c o s t ) Taxes ( l a n d a s s o c i a t e d c o s t ) farm r e c e i p t s : R i c e Sweet Po t a t o e Sugar V e g e t a b l e s Beans 2 0 8 S p e c i a l c r o p s Mushroom Orange, c i t r u s Other f r u i t P i g s P o u l t r y Other l i v e s t o c k P r o c e s s e d food F o r e s t r y p r o d u c t s F i s h e r y p r o d u c t s Other o f f - f a r m expenses: a t t a c h e d t o o f f - f a r m a c t i v i t i e s e x t r a o r d i n a r y l o s s e s ( t h e f t , d i s a s t e r ) o f f - f a r m r e c e i p t s : p r o p e r t y temporary s e r v i c e s f u l l - t i m e o f f - f a r m l a b o u r income o t h e r consumption expenses: 17 c a t e g o r i e s Stock d a t a b a l a n c e sheet at the b e g i n n i n g and a t the end of the year A s s e t s : c u r r e n t : Cash F i n a n c i a l a s s e t s Produce L i v e s t o c k Growing s t o c k P r o c e s s e d s t o c k Other f i x e d : Land (owned) B u i l d i n g s T rees Machines L i a b i l i t i e s : s h o r t : S h o r t l o a n s A c c o u nts p a y a b l e A c c o u nts p r e r e c e i v e d l o n g : Long l o a n s o t h e r a r e a : c u l t i v a t a b l e : paddy, d r y , o t h e r cropped: F i r s t r i c e , second r i c e , o t h e r a n n u a l c r o p s , p e r p e t u a l c r o p s 209 manpower: f a m i l y members: male, female, o l d , young l a b o u r day i n p u t t o the farm a c t i v i t y : f a m i l y male, f e m a l e , h i r e d l a b o u r days r i c e y i e l d s : f i r s t and second c r o p d i s t r i c t s 8 r e g i o n s : N o r t h , Mid and South R i c e , Sugar (used i n sample), Tea, South-West Mixed, B a n a n a - P i n a p p l e , E a s t Taiwan b. S e c t o r i a l d a t a S o u r c e s : PDAF, a g r i c u l t u r a l yearbooks P Foodbureau, Food p r o d u c t i o n i n Taiwan (a n n u a l ) r i c e r e v i e w magazine ( q u a r t e r l y ) Taiwan economic a b s t r a c t ( a n n u a l ) DGBAS, p r i c e s and p r i c e i n d i c e s ( c o l l e c t e d monthly t h r o u g h the Farmers' A s s o c i a t i o n s and l o c a l markets i n 55 towns) s t a t i s t i c a l yearbook of Taiwan ( l a b o u r s u r vey d a t a based on q u a r t e r l y s u r v e y s J a n u a r y , A p r i l , J u l y , October) JCRR (CAPD), annual r e p o r t s CAFC, the r e p o r t of a g r i c u l t u r a l census of Taiwan-Fukien d i s t r i c t of the R e p u b l i c of China (1960, 1970, 1975, 1980) l a n d a l l o c a t i o n d a t a e t c . 210 Ta b l e C.1: DISTRIBUTION OF SAMPLE OBSERVATIONS Number of O b s e r v a t i o n s % O b s e r v a t i o n s FT PT2 PT 1 LP T o t a l FT PT2 PT1 LP T o t a l NR S 74 42 77 80 273 1 3 8 1 4 1 4 49 M 80 58 38 28 204 1 4 1 0 7 5 37 L 40 1 7 1 7 6 80 7 3 3 1 1 4 1 94 1 1 7 1 32 1 1 4 557 35 21 24 20 MR S 68 65 1 22 1 27 382 1 1 10 20 20 61 M 68. 51 57 18 1 94 1 1 8 9 3 31 L 1 4 18 9 7 48 2 3 1 1 8 150 1 34 188 1 52 624 24 21 3 0 24 SR S 32 47 66 1 19 264 6 9 1 3 23 50 M 77 53 62 6 198 1 5 10 1 2 1 38 L 47 1 3 4 1 65 9 2 1 0 1 2 1 56 1 1 3 .1 32 126 527 30 21 25 24 SUG S 48 24 81 94 247 8 4 1 4 1 7 44 M 68 26 61 29 184 1 2 5 1 1 5 33 L 80 38 13 4 1 35 1 4 7 2 1 . 24 196 88 1 55 127 566 35 1 6 ' 27 22 Number of O b s e r v a t i o n s i n Each Year 1972 73 74 75 76 77 78 79 80 T o t a l NR 60 62 64 63 63 62 62 60 61 557 MR 72 78 69 68 66 70 71 59 71 624 SR 42 45 64 64 62 64 64 61 61 527 SUG 62 64 63 64 64 63 60 62 64 566 Note: P a r t i c i p a t i o n and s i z e a r e d e f i n e d a s : %PT = FL / NFL + FL EP = P + .87D + . 1 80 %PT: p a r t i c i p a t i o n r a t e EP: e q u i v a l e n t paddy l a n d FL: farm l a b o u r P : paddy l a n d NFL: non farm l a b o u r D : d r y l a n d FT: f u l l - t i m e farm O : o t h e r l a n d LP: low p a r t i c i p a n t farm 21 1 APPENDIX D INFORMATION FOR CHAPTER IV - I n t r o d u c t i o n t o the dummy v a r i a b l e r e g r e s s i o n t a b l e s -NR : Labour use per h e c t a r e (Table D.1) -MR : Labour use per h e c t a r e ( T a b l e D.2) -SR : Labour use per h e c t a r e ( T a b l e D.3) -SUG: Labour use per h e c t a r e ( T a b l e D.4) -NR : S e l e c t e d output amounts per h e c t a r e ( T a b l e D.5) -MR : S e l e c t e d output amounts per h e c t a r e ( T a b l e D.6) -SR : S e l e c t e d output amounts per h e c t a r e ( T a b l e D.7) -SUG: S e l e c t e d output amounts per h e c t a r e ( T a b l e D.8) -NR : S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e ( T a b l e D. 9) -MR : S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e ( T a b l e D. 10) -SR : S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e ( T a b l e D. 1 1 ) -SUG: S e l e c t e d i n t e r m e d i a t e i n p u t s per h e c t a r e ( T a b l e D. 12) -NR : s i m p l e p r o d u c t i v i t y measures (Table D.13) -MR : s i m p l e p r o d u c t i v i t y measures (Table D. 1 4) -SR : s i m p l e p r o d u c t i v i t y measures (Table D. 1 5) -SUG: s i m p l e p r o d u c t i v i t y measures (Table D. 1 6) 212 INTRODUCTION TO THE REGRESSION TABLES We a p p l i e d the dummy v a r i a b l e model on each of the p r o d u c t i o n v a r i a b l e s f o r each r e g i o n and th e s e m u l t i - c h a r a c t e r i s t i c r e g r e s s i o n s a r e r e p o r t e d i n the f o l l o w i n g t a b l e s . R eported a r e the dummy v a r i a b l e c o e f f i c i e n t s and t h e i r s t a n d a r d d e v i a t i o n s . A l s o r e p o r t e d f o r each c h a r a c t e r i s t i c a r e the F - s t a t i s t i c f o r the n u l l - h y p o t h e s i s t h a t a l l the c o e f f i c i e n t s a s s o c i a t e d w i t h the c h a r a c t e r i s t i c were z e r o (underneath the F - s t a t i s t i c v a l u e i s the a s s o c i a t e d s i g n i f i c a n c e l e v e l , i f t h i s v a l u e i s more than .05 or .10 then the n u l l - h y p o t h e s i s can be r e j e c t e d ) . The r e p o r t e d R 2 i s the c o r r e c t e d R 2 f o r the degrees of freedom i n the • r e g r e s s i o n . The m u l t i - c h a r a c t e r i s t i c s t a b l e s a r e not s i m p l e t o re a d , but the same s t r u c t u r e w i l l be used t h r o u g h o u t t h i s s t u d y . Each dummy v a r i a b l e r e g r e s s i o n r e p o r t e d i s of the form: 2 3 8 2 a = a0 + L a <$ + L a d + Z a d + Z a d d + e s=1 s s p=1 p p t=1 t t s=1 sb s b s: s i z e p: p a r t i c i p a t i o n t : year b: 1972-76 p e r i o d 213 These a r e the g u i d e l i n e s f o r each dummy v a r i a b l e r e g r e s s i o n r e p o r t e d : - a : t h e base i s the l a r g e , f u l l - t i m e farm i n 1980. 0 (L,FT,1980). T h i s c o e f f i c i e n t i s always s i g n i f i c a n t e x c e p t when n e g a t i v e . - i f a < 0 : p o s i t i v e e f f e c t of farm s i z e ( l a r g e r farms s show a h i g h e r v a r i a b l e v a l u e ) - i f a < 0 : p o s i t i v e e f f e c t from p a r t i c i p a t i o n ( f u l l - p time farms show a h i g h e r v a r i a b l e v a l u e ) - i f a and a of the same s i g n then the v a l u e l e v e l s of sb s the l a r g e and s m a l l e r farms grew c l o s e r t o g e t h e r through t i m e . - i f a > a > a . . . > 0 : t h e r e has been a n e g a t i v e 72 73 74 t r e n d i n the development f o r the l a r g e farms. - i f a and a of the same s i g n then both farms s i z e s sb t show the same t r e n d -a = AS : s m a l l farm (up to 1 ha) s AM : medium farm (between 1 and 2 ha) a = APT2 : p a r t i c i p a t i o n l e v e l 2 (between 50% and 75%) p APT1 : p a r t i c i p a t i o n l e v e l 1 (between 25% and 50%) ALP : low p a r t i c i p a t i o n l e v e l ( l e s s than 25%) a = ASB : s m a l l farm u n t i l 1976 sb AMB : medium farm u n t i l 1976 a = A1972 : year 1972, e t c . t F-s : F-t e s t f o r H 0 . AS = AM = 0 F-p : F-t e s t f o r H 0 APT2 = APT 1 = ALP = 0 F-b : F-t e s t f o r H 0 ASB = AMB = 0 F-t : F-t e s t f o r H 0 A1972 = ... = A1979 = 0 F :- F- t e s t f o r H 0 a l l c o e f f i c i e n t s z e r o * ': t - t e s t f o r H 0 : the c o e f f i c i e n t i s z e r o a t .05 s i g n . ** : t -t e s t f o r H 0 " a t .10 s i g n i f i c a n c e l e v e l . beneath each F - s t a t i s t i c i s the s i g n i f i c a n c e l e v e l i n b r a c k e t s . - NR : N o r t h R i c e r e g i o n MR : M i d R i c e r e g i o n SR : South R i c e r e g i o n SUG: Sugar r e g i o n 214 An example based on the t a b l e D.1. f o r the t o t a l l a b o u r i n p u t shows how the t a b l e s h o u l d be r e a d , we c o n s i d e r the NR r e g i o n : -a s m a l l f u l l - t i m e farmer i n 1972 had the f o l l o w i n g amount: L, 1980,FT + AS + A1972 .+ ASB = 258 . + 447 + 9 2 + 19 = 816 -a s m a l l , low p a r t i c i p a n t farmer i n 1972: L,1980,FT + AS + A1972 + ASB + ALP = 258 + 447 + 9 2 + 19 - 402 = 414 -a l a r g e f u l l - t i m e farm i n 1972: L,1980,FT + A1972 = 258 + 92 350 -a s m a l l f u l l - t i m e farmer i n 1979: L,1980,FT + AS + A1979 = 258 + 447 + 48 732 -a s m a l l low p a r t i c i p a n t farmer i n 1979: L,1980,FT + AS + A1979 + ALP = 258 + 447 + 48 - 402 = 351 -a l a r g e f u l l - t i m e farmer i n 1980: L,1980,FT + A1979 = 258 + 48 306 The o t h e r farm group m u l t i p l e c r o p i n d i c e s can be c o n s t r u c t e d s i m i l a r l y . T h i s dummy v a r i a b l e approach and i t s p r e s e n t a t i o n s are c o n s i s t e n t l y used throughout t h i s s t u d y . 3- T a b l e D . 1 : NORTH R I C E : LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION s i z e and b r e a k c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L , 1 9 8 0 , F T APT2 flPT1 ALP F - s F - p F - b F - t F T LABOUR 447* 19 121 -15 258 -90 -248* -402* 20 .02 20. 75 .09 . 23 9 .09 R J = . 18 (94) (116) (95) (120) (98) (51) (50) (54) (0) (0) ( .91) ( .99) (0) MALE FAM LAB 304* -13 79 -10 160 -47 -163* -256* 22 . 31 20 .66 .01 .21 8.81 R ' = . 17 (61) (75) (62) (79) (64) (33) (32) (35) (0) (0) ( .99) ( . 99) (0) FEM FAMILY LAB 94* 17 27 1 1 48 5 . -36* -83* 16.47 18.63 . 22 . 72 8 . 74 R' = . 17 (21) (26) (22) (27) (22) ( 12) (11) ( 12) (0) (0) ( .80) ( .67) (0) HIRED LABOUR 49 15 15 - 17 50 -48* - 4 4 * -63* 1 . 27 3. 39 . 43 .09 1 . 47 R ! = .01 (40) (49) (41) (51) (42) (22) (21) (23) ( .28) ( .02) ( .65) ( . 99) ( . 11) ANIMAL LAB 1 . 43 2.21 . 4 1 .05 . 1 1 .07 - . 12 - .92 1.12 .69 2 . 40 1 . 33 2 . 97 R 1 = . 05 ( 1 . 2 5 ) ( 1 . 5 4 ) (1 .27) ( 1 .59) (1 .30 ) ( .68) ( .67) ( .72) ( .32) ( .56) ( .09) ( . 22) (0) MACHINE HIRED .97* - . 5 5 * * .40 - . 21 1 .02 .11 .51* .66* 9. 19 7 . 88 1 . 89 4 .81 13.69 R'=.26 ( .27) ( .34) ( .28) ( .35) ( .28) .( • 15) ( . 14) ( . 16) (0) (0) ( . 15) (0) (0) MACHINE OWNED 31986* -20643 20021 -13712 28802 7657 20535* 1679 2 .99 3. 10 . 78 . 37 2 . 33 R 1 = . 0 3 (13635) (16863) ( 13864) (17389) ( 14263) (7429) (7197) (7886) ( .05) ( .03) ( .46) ( .94) (0) T FARM ASSETS 18643 -4507 14769 - 15928 104515 3414 12957 -10990 .41 1 . 30 . 29 . 38 . 94 R ! =0 (20504) (25359) (20848) (26149) (21448) ( 1 1 173) (10823) (11859) ( .66) ( .27) ( .75) ( .93) ( .51) * : s i g n i f i c a n t l y ( . 05 ) d i f f e r e n t f rom z e r o (** :s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R* i s the c o r r e c t e d R 1 ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 383.24 345.93 4592.64 1 1 d : u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + m i s c a l e n e o u s farm d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D . 1 : NORTH R I C E : LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION ( c o n t i n u e d ) A1972 A1973 annua 1 A1974 s h i f t c o e f f i c i e n t s A1975 A1976 A1977 A1978 As1979 T LABOUR 92 15 33 9 45 12 16 48 ( 123) ( 122) ( 122) (123) (123) (79) (79) (79) MALE FAM LAB 25 -7 14 - 1 1 18 - 1 1 4 35 (80) (80) (79) (80) (80) (51) (51) (51) FEM FAMILY LAB 29 - 1 -10 3 4 13 7 9 (28) (28) (28) (28) (28) ( 18) ( 18) ( 18) HIRED LABOUR 37 23 29 17 22 11 5 4 (52) (52) (52) (52) (52) (33) (33) (34) ANIMAL LABOUR .48 2.81 .39 . 17 . 24 1 .89 . 86 . 72 ( 1 .63) ( 1 .62) ( 1 . 6 2 ) ( 1 .63) ( 1 .64) ( 1.04 ) ( 1 . 0 5 ) ( 1 .05) MACHINE HIRED -1 .06* - 1 . 1 5 * -1 .08* - 1 . 0 8 * - .97* - 1 . 2 0 * - . 50* - . 12 ( .36) ( .35) ( .35) ( .35) ( 36) ( .23) ( .23) ( .23) MACHINE OWNED -4676 -7832 - 16125 - 15474 -5896 - 10778 -9370 -5375 (17867) (1771 1 ) ( 17744) (17826) ( 17895) (11475) ( 1 1429) ( 1 1497 ) T FARM ASSETS -7052 -2088 -17407 -25378 -6630 -2927 -63 16 3567 (26869) (26633) (26683) (26806) (26910) ( 17256) ( 17187) ( 17289) * : s i g n i f i c a n t l y ( . 05 ) d i f f e r e n t from z e r o (** s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R ! i s the c o r r e c t e d R 2 ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 : 383.24 345 .93 4592.64 1 1 d : u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + misea 1eneous f a r m d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D . 2 : MID R I C E : LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION s 1 ze and b r e a k c o e f f I c l e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L , 1 9 8 0 , F T APT2 APT 1 ALP F - s F-.P F - b F - t F T LABOUR 267* 50 94 -4 301 -33 -194* -297* 13.01 31 .09 . 56 . 74 9 :94 R* = . 18 (79) (96) (82) (101) (85) (35) (32) (35) (0) (0) ( .57) ( .65) (0) MALE FAM LAB 129* 28 34 16 201 -29* -122* -204* 18 .47 71 .36 . 29 . 37 17 . 35 R ! = . 2 8 (35) (42) (36) (44) (37) (15) (14) (15) (0) (O) ( .75) ( .94) (0) FEM FAMILY LAB 109* 7 58** -24 76 - 1 -65* - 100* 10.69 26 .94 1 . 23 1 . 29 9 . 26 R* = . 17 (30) (36) (31) (38) (32) (13) (12) (13) CO) (0) ( .29) ( .25) (0) HIRED LABOUR 30 13 2 4 24 -3 -7 6 1 . 33 . 29 . 12 1 . 22 1 . 77 R* = .02 (35) (43) (37) (45) (38) (16) ( 15) ( 16) ( .27) ( .83) ( .89) ( .28) ( .04) ANIMAL LAB .54 3 .09 .91 .39 - . 19 . 29 .86 1 .92* . 18 2 . 59 3 .69 2 .48 4 . 54 R ! = . 08 ( 1 .65) ( 2 . 0 1 ) ( 1 . 7 2 ) (2 .10 ) (1 .78 ) ( 73) ( .68) ( . 73 ) ( . 83 ) ( .05) ( .03) ( .01) (0) MACHINE HIRED . 20 - .04 .06 .09 1 . 79 . 39* .83* . 98* .'35 14 .69 . 16 4 .83 1 1 . 99 R* = .21 ( .37) ( .45) ( .39) ( .48) ( .40) .( . 16) ( . 15) ( • 17) ( .70) (0) ( 85) (0) (0) MACHINE OWNED -9104 -569 15190 -22896 65823 4103 -4702 -9036 5 . 74 1 . 59 3 .00 2 .62 5 .89 R ! = . 1 1 ( 14064) (17177) (14662) (18008) (15107) (6240) (5795) (6231 ) (0) ( • 18) ( .05) ( .01) (0) T FARM ASSETS -10109 27487 4195 -261 1 143222 687 -12926 1 129 . 65 .93 1 .83 1 . 46 1 . 63 R 1 = . 02 (25005 ) (30539) (26069) (32017) (26858) (11093) (10303) ( 1 1078) ( .52) ( .43) ( . 16) ( . 17) ( .06) * : s i g n i f i c a n t l y ( . 0 5 ) d i f f e r e n t f rom z e r o ( * * : s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R* i s the c o r r e c t e d R ! ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 : 383.24 345.93 4592.64 1 1 d : u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + m i s c a l e n e o u s farm d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D . 2 : MID R I C E : LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION ( c o n t i n u e d ) 41972 41973 annua 1 A1974 s h i f t c o e f f i c i e n t s 41975 41976 41977 4 1978 41979 T LABOUR 54 55 63 58 - 12 32 68 -10 ( 100) (101) ( 102) (101) ( 104) (49) (19) (51) MALE FAM LAB -13 -10 -27 -1 -31 -0 10 1 (44) (44) (45) (45) (45) (22) (22) (23) FEM FAMILY LAB 26 46 28 39 7 12 30 - 1 1 (38) (38) (39) (38) (39) (19) ( 19) (20) HIRED LABOUR 41 19 63 20 12 20 28 - o (45) (45) (46) (46) - (46) (22) (22) (23) ANIMAL LAB 1.14 .31 1 .39 3 .09 - 1 . 35 .82 .65 . 75 (2 .09 ) ( 2 . 1 0 ) (2 .13 ) ( 2 . 1 3 ) (2 . 16) ( 1 . 0 3 ) ( 1 . 0 3 ) ( 1 . 0 8 ) MACHINE HIRED - 1 . 6 3 * - 1 . 5 2 * - 1 . 4 1 * 1.36* 1.01* - .98* - . 53* . 07 ( .47) ( .48) ( .48) ( .48) ( .49) ( .23) (23) ( .24) MACHINE OWNED -34936** -38388* -38844* -32030** - 17229 -23876* -13871 2359 ( 17929) ( 17984) (18191) (18202) (18507) (8771) (8758) (9175) T FARM ASSETS -59652** -48846 -53917** -45648 -22904 -25571 -15509 1214 (31875) (31974) (32342) (32361 ) (32904) ( 15594) ( 15571 ) (16312) * : s i g n i f i c a n t l y ( . 05 ) d i f f e r e n t f rom z e r o (** s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R ! i s the c o r r e c t e d & ' ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 : 383.24 345.93 4592.64 1 1 d : u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + m i s c a l e n e o u s f a r m d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D . 3 : SOUTH R I C E : LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION s 1 ze and b r e a k c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L , 1 9 8 0 , F T APT2 APT 1 ALP F - s F - p F - b F - t F T LABOUR 300* -4 93* 22 201 15 -77* -183* 51 . 30 26 .89 . 35 1 . 73 13 .85 R ! = . 27 (37) (47) (37) • (48) (39) (21) (21) (24) (0) (0) ( .70) ( .09) (0) MALE FAM LAB 175* -1 65* 21 113 -2 -74* - 126* 42 .99 33.51 . 74 . 56 1 1 .83 R ! = . 24 (22) (29) (22) (29) (24) (13) ( 13) ( 15) (0) (0) ( . 48 ) ( .81 ) (0) FEM FAMILY LAB 143* -5 43* 4 30 31* -4 -74* 38 . 76 22 . 17 . 12 1 . 38 1 1 . 50 R' = . 23 (20) (26) (20) (27) (21) C 1 2 ) (12) (13) (0) (0) ( .89) ( .20) (0) HIRED LABOUR - 18** 2 -15 -3 58 -13* 1 17* 1 . 72 8 .23 .18 2.21 6 .14 R J = . 13 ( 10) (12) (10) ( 13) (10) (6) (6) (6) ( ..18) (0) ( .83) ( .03) (0) ANIMAL LAB 2 . 34 1 .97 1 . 78 . 23 .57 - 2 . 1 7 * - . 14 3 . 75* 1.31 13.88 1 . 22 .48 6 . 56 R ! = . 14 ( 1 .45) ( 1 .84) ( 1 . 4 3 ) ( 1 .90) ( 1 . 5 2 ) ( .84) ( .83) ( .95) ( .27) (0) ( . 30) ( .87) (0) MACHINE HIRED . 39 - . 1 1 . 68* - . 57 2 .03 - . 14 . 12 36** 2 . 96 2 . 39 1 .96 3.31 8 .14 R ! = . 17 ( .29) ( .38) ( .29) ( .39) ( .31) ( . 17) ( . 17) ( .20) ( .05) ( .07) ( . 14) (0) (0) MACHINE OWNED 6314 -21 15 -1 1368 14973 49206 '4688 - 1876 1 1655 2 . 50 1 . 26 1 .44 1 .08 2 . 72 R ! = . 05 (12029) (15230) ( 1 1882) ( 15676) (12603) (6922) (6894) (7883) ( 08) ( .29) ( .24) ( .38) (0) T FARM ASSETS 13392 -10654 -26241 16302 94001 1 1664 25567** 26208** 3 .19 1 .42 .87 1 .07 2 .13 R ! = . 03 (23903) (30262) (23610) (31 149) (25043) ( 13755) ( 13699) (15665) ( .04) ( .24) ( . 42 ) ( .38) ( .01) * : s i g n i f i c a n t l y ( . 05 ) d i f f e r e n t f rom z e r o ( * * : s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R' i s the c o r r e c t e d R ! ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 : 383.24 345 .93 4592.64 1 1 d : u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + m i s c a l e n e o u s f a r m d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D . 3 : SOUTH R I C E : LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION ( c o n t i n u e d ) A1972 A1973 A1974 annua 1 A1975 A1976 s h i f t c o e f f i c i e n t s A1977 A1978 A1979 T LABOUR 93** 135* 56 57 47 34 52** 16 (53) (53) (51) (50) (50) (30) (30) (30) MALE FAM LAB 16 23 2 -6 -9 -9 6 - 1 (32) (32) (3D (31) (31) ( 18) ( 18) ( 19) FEM FAMILY LAB 46 61* 24 34 24 26 3 1** 9 (29) (29) (28) (28) (28) (17) (17) (17) HIRED LABOUR 31* 51* 30* 29* 32* 16* 14** 8 (14) ( 14) ( 13) (13) (13) (8) (8) (8) ANIMAL LAB .66 1 . 27 1.15 .28 1 .84 1 . 54 1.15 1.12 (2 .07 ) ( 2 . 0 6 ) ( 1 .99) (1 .98 ) ( 1 . 9 7 ) ( 1 . 1 8 ) (1 . 18) (1 . 19) MACHINE HIRED - 1.34* - 1 .32* - 1 . 27* - 1 . 0 3 * - 1 . 0 1 * - .95* . 40 - .08 ( .42) ( .43) ( .41) ( .41) ( .41) ( .24) ( .24) ( .25) MACHINE OWNED -40537* -35808* -35543* -32945* -23687 -15496 -5048 -7097 (17194) (17092) ( 16451 ) ( 16293) (16315) (9849) (9776) (9906) T FARM ASSETS -38873 -15961 -20455 -25885 -8232 -6332 -8895 31451 (34165) (33963) (32688) (32375) (32419) ( 19569) ( 19424) ( 19683) * : s i g n i f i c a n t l y ( . 05 ) d i f f e r e n t f rom z e r o (** s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R* i s the c o r r e c t e d R ! ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 383.24 345.93 4592.64 1 1 d: u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + m i s c a l e n e o u s farm d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D . 4 : SUGAR: LABOUR USE p e r HECTARE: DUMMY VARIABLE REGRESSION s i ze and b r e a k c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L , 1 9 8 0 , F T APT2 APT 1 ALP F - s F - p F - b F - t F T LABOUR 344* -28 127* - 14 281 -52** - 173* -311* 49 . 26 47 . 32 . 19 . 92 16 .06 R ! = . 2 9 (37) (46) (38) (49) (38) (27) (24) (27) (0) (0) ( .83) ( . 50) (0) MALE FAM LAB 184* -23 68* - 10 134 -25** - 103* - 190* 53 . 28 66.81 . 52 1 .52 19 .27 R ! = . 33 (19) (24) (20) (25) ( 19) (14) (13) (14) (0) (0) ( . 59) ( . 15) (0) FEM FAMILY LAB 162* -10 60* -1 109 - 12 -70* - 130* 37 . 22 28 .84 . 12 .64 1 1 . 27 R ! = . 2 1 (20) (25) (21) (27) (20) (15) (13) ( 15) (0) (0) ( . 89) ( .75) (0) HIRED LABOUR -3 5 0 -4 37 - 15** - 1 9 .05 2 .08 . 26 . 68 1 . 30 R J = .01 (11) (14) (12) (15) (12) (8) (8) (8) ( .95) ( . 10) ( .77) ( .71) ( .20) ANIMAL LAB 2.01 2 . 38 2 .38** 1 . 79 2 .08 - .63 1 .96* . 44 1 . 50 2 . 30 .96 1 . 34 3.41 R' = .06 ( 1 .38) (1 .73 ) ( 1 . 4 3 ) (1 .87 ) ( 1 . 4 1 ) (1 .03 ) ( .91 ) ( 1 . 0 1 ) ( .22) ( .08) ( . 39) ( .22) (0) MACHINE HIRED " - .03 .21 - . 1 1 .21 1 .24 - .06 .02 - . 16 . 18 . 78 .51 4 .47 4 . 58 R ' = .09 ( • 18) ( .23) ( .19) ( .24) ( . 18) ( . 13) ( . 12) ( .13) ( .83) ( .51) ( .60) (0) (0) MACHINE OWNED 17094* -10095** 967 2290 26968 2064 -8650* - 1 1356* 10.03 5 .47 2 .95 1.61 4 . 44 R » = . 0 8 (4813) (6016) (5002) (6420) (4917) (3572) (3192) (3495) (0) (0) ( .05) ( . 12) (0) T FARM ASSETS 34720* -8096 16909** -13417 63497 -2409 -19479* -28251* 7 . 35 7 .02 . 59 1 .09 3 . 10 R J = .05 (9288) (11609) (9652) (12389) (9488) (6894) (6 159 ) (6745) (0) (0) ( . 56) ( .37) (0) * : s i g n i f i c a n t l y ( .05) d i f f e r e n t f rom z e r o ( * * : s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) ( t h e r e p o r t e d R' i s the c o r r e c t e d R ! ) a : q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e l a n d a r e a b : t y p e of l a b o u r a b o v e : Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T f a r m a s s e t c : p r i c e i n 1980 : 383.24 345.93 4592.64 1 1 d: u n i t s r e p o r t e d a b o v e : man-days man-days man-days day ha s e r v i c e d s t o c k v a l u e s t o c k v a l u e e : l a b o u r : f a m i l y l a b o u r + h i r e d human l a b o u r f : T f a r m a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + m i s c a l e n e o u s f a r m d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D.4: SUGAR: LABOUR USE per HECTARE: DUMMY VARIABLE REGRESSION ( c o n t i n u e d ) 61972 A1973 annua 1 A1974 s h i f t c o e f f i c i e n t s A1975 A1976 A1977 A1978 A1979 T LABOUR 32 -4 -22 -3 47 -30 -53 -27 (50) (50) (50) (50) (50) (38) (38) (38) MALE FAM LAB 4 -23 -25 -14 20 - 17 -34** 2 (26) (26) (26) (25) (26) (20) (20) (20) FEM FAMILY LAB 7 4 -13 -12 -1 -28 -27 -29 (27) (27) (27) (27) (27) (21 ) (21) (21) HIRED LABOUR 21 15 17 23 28 * * 16 7 0 (15) ( 1 5 ) (15) (15) ( 15) (12) (12) (12) ANIMAL LAB 2.82 .88 .02 -1 .50 1.17 1.14 . 89 . 22 (1.87) ( 1 .86) ( 1 .86) ( 1 .87) ( 1 .87) (1.42) ( 1 .43) ( 1 .42) MACHINE HIRED -1.04* -.96* - .85* -.85* - . 53* - .42* . 10 .03 ( .24) (.24) ( .24) ( .24) ( .24) ( . 19) ( . 19) ( . 19) MACHINE OWNED -14346* - 12712* -16340* -13161* -1 1582** -12110* -6455 -24 (6491) (6462) (6467) (6501) (6500) (4934) (4983) (4942) T FARM ASSETS -4481 43 -7750 -4806 1359 -16109** -327 9792 ( 12526) (12470) (12480) (12545) (12543) (9521 ) (9616) (9537) *: s i g n i f i c a n t l y (.05) di f f e r e n t from z e r o (** s i g n .10) ( s t a n d a r d d e v i a t i o n s i n b r a c k e t s ) (the r e p o r t e d R ! i s the c o r r e c t e d R 2 ) a: q u a n t i t i e s p e r h e c t a r e paddy e q u i v a l e n t c u l t i v a t a b l e land area b: type of l a b o u r above: Male ( f a m i l y ) Female ( f a m i l y ) H i r e d Human H i r e d Animal h i r e d machine owned machine T farm a s s e t c: p r i c e i n 1980 : 383.24 345.93 4592.64 1 1 d: u n i t s r e p o r t e d above: man-days man-days man-days day ha s e r v i c e d stock v a l u e s t o c k v a l u e e: l a b o u r : f a m i l y l a b o u r + h i r e d human labour f : T farm a s s e t s : machine owned + t r e e s + l i v e s t o c k + t o o l s + miscaleneous farm d u r a b l e s ( d e f l a t e d w i t h an a s s e t d e f l a t o r ) T a b l e D.5: NORTH RICE: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) s i z e and break c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L,1980,FT APT2 APT 1 ALP F-s F-p F-b F-t F RICE 1555* -1096* 2350* -848 4272 418 1352* 1476* 10. 34 1 1 .92 1 . 46 2 . 88 8 .49 R ! = . 17 (519) (641) (578) (662) (543) (283) (275) (298) (0) (0) ( .23) (0) (0) SWEET POTATO 260 545** 206 629** 230 -176 -487* -687* .49 8.28 1 .84 1 . 46 6.48 R ! = . 13 (262) (324) (266) (334) (274) ( 143) (139) (150) ( .61 ) (0) (.16) ( . 17) (0) SUGAR -76 43 -94 - 134 207 - 129 - 13 -161 .03 .31 . 17 1 . 49 1 .07 R ! = .02 (359) (443) (365) (458) (375) ( 196) ( 190) (206) ( .96) ( .81) ( .84) ( . 16) ( .39) VEGETABLES 22246* -4710 1940 -59 1 1404 -2209 -16891* -22250* 14.68 16 . 97 . 43 . 40 5 . 52 R 1 = . 1 1 (6330) (7825) (6439) (8085) (6623) (3455) (3361) (3638) (0) (0) ( 6 5 ) ( .92) (0) ORANGE - 180 -165 -308* - 142 279 150* -0 -28 4. 27 2.89 . 76 . 26 3 .00 R !=.05 (110) (136) (112) ( 140) (115) (60) (58) (63) ( .01) ( .03) (.47) ( . 98) (0) FRUIT -797* 378* -851* 31 1 1058 - -244* -307* -267* 15 . 48 5.99 1 .94 . 79 5 . 42 R* = . 1 1 (155) ( 192) ( 158) ( 198) ( 162) (85) (82) (89) (0) (0) (.14) ( .62) (O) CEREAL 33 31 2 7 41 -40* * -53* -57* . 76 2 .72 .31 . 79 1.41 R ! = .01 (42) (52) (43) (54) (44) (23) (22) (24) ( .47) ( .04) (.73) ( .61) ( . 14) SPECIAL CROP -282 298 -31 1 - 19 500 -86 -201 25 .81 1 .09 1 . 28 . 52 1.11 R ! =0 (246) (303) (249) (313) (256) (134) (130) (141) ( .44) ( .35) ( 28) ( .84) ( .35) HOG 457 796 997 -205 121 512 -700 -960** . 79 2.90 .92 . 32 1 . 34 R 1 = . 01 (886) (1096) (901 ) ( 1 132) (927) (484) (471 ) (509) ( .45) ( .03) (.40) ( .96) ( • 18) P°0ULTRY 51** 19 82 - 1 1 38 7 6 -20 3.63 .81 .67 . 39 1 .53 R ' = . 01 (31) (38) (31) (39) (32) (17) ( 16) ( 18) ( .03) (.49) (.52) ( .93) ( .09) DRY LAND% - .'14* .02 '-.21 * - .02 . 30 .03 - .08* - . 12* 9 . 66 10.00 . 48 . 57 6 . 30 R' = . 13 ( .05) ( .06) ( .05) ( .06) ( .05) ( .03) ( .03) (.03) (0) (0) (.61) ( .81) (0) TOTAL OUTPUT 171502* 21894 85106 -17223 184372 9933 -130850* -185060* 5.15 14 .07 . 29 .07 4 . 10 R* = (59986) (74155) (61023) (76619) (62769) (32740) (31848) (34478) (0) (0) (.75) ( .99) (O) P r i c e s : R i c e : 14.32 NT$/kg; Sweet P o t a t o : 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; 0range:9.066 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; Hog: 48.258 NT$/kg; P o u l t r y : 129 NT$ per animal T a b l e D.5: NORTH RICE: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) ( c o n t i n u e d ) annual s h i f t c o e f f i c i e n t s A1972 A1973 A1974 A1975 A1976 A1977 A1978 A 1979 RICE 100 -987 -1114* -293 368 - 159 -671 -755 (680) (674) (675) (679) (681 ) (435) (435) (478) SWEET POTATO 501 40 215 171 -197 155 75 -29 (343) (340) (341 ) (243) (344) (219) (220) (221 ) SUGAR 298 758 -50 -56 -42 -79 -80 -46 (470) (467) (467) (470) (471) (301) (301 ) (303) VEGETABLES -8316 -5070 -2517 -5026 -1395 -5144 -2869 -1044 (8298) (8225) (8241) (8287) (83 12 ) (5305) (5308) (5340) ORANGE 129 109 151 148 140 -35 24 14 ( 144) ( 142) (143) ( 144) ( 144) (92) (92) (92) FRUIT -264 -259 -344** -385** -395** - 108 -56 39 (203) (202) (202) (203) (204) (130) (130) ( 130) CEREAL 37 -37 -30 -28 -30 - 13 - 1 1 -20 (55) (55) (55) (55) (50) (35) (35) (35) SPECIAL CROPS -20 -51 -154 137 -246 -36 -23 7 (321 ) (319) (319) (321 ) (322) (205) (206) (207) HOG 275 574 825 858 -26 422 403 346 ( 1 162) (1152) (1154) ( 1 160) (1164) (743) (743) (748) POULTRY -8 -32 -19 - 17 -26 -25 -20 -37 (40) (40) (40) . (40) (41) (26) (26) (26) DRY LAND% .01 - .05 - .01 - .01 - .00 -.05 - .03 - .01 ( .06) ( .06) (.06) ( .06) ( .06) ( .04) ( .04) ( .04) TOTAL OUTPUT -20217 -31960 -3879 -19153 -29280 -12857 -1 1733 -12207 (78643) (77951 ) (78098) (78531 ) (78774) (50272) (50306) (506O8) P r i c e s : R i c e : 14.32 NT$/kg; Sweet P o t a t o : 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; 0range:9.066 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; Hog: 48.258 NT$/kg; P o u l t r y : 129 NTS per animal T a b l e D.6: MID RICE: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) s i z e and break c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L,1980,FT APT2 APT 1 ALP F - S F-p F-b F-t F RICE -3141* 2402* -1329 1415 9047 1 186* 2257* 2738* 12.74 20. 22 3 . 46 3.61 6.92 R' = . 12 (870) (1058) (906) ( 1 109) (935) (384) (358) (387) (0) (0) ( .03) (0) (0) SWEET POTATO -214 104 1 83 92 95 345* 2 .96 3.21 .04 2 . 44 4.81 R 2 = .08 (322) (392) (336) (411) (346) ( 142) (133) (143) ( .38) ( .02) ( .96) ( .01) (0) SUGAR 2400 -5373 2084 - 1437 -961 1031 879 2879* . 37 1.91 3.01 .64 1 . 24 R'=.06 (2797) (3400) (2913) (3563) (3004) ( 1234) (1151) ( 1242 ) ( .69) ( . 13) ( .05) ( .75) ( .24) VEGETABLES 6837* -191 4395 -2328 7572 -3984* -7191* -9758* 3. 76 22.56 . 69 . 53 5.89 RJ = . 1 1 (2833) (3445) (2951) (3610) (3043) (1251 ) ( 1 166) ( 1258) ( .02) (0) ( . 50) ( .84) (0) ORANGE 19 -253 104 -283 -56 37 65 123 . 24 1.14 . 40 3.19 2 .04 R ! = .02 (252) (307) (263) (321 ) (271) (111) ( 104) (112) ( .79) ( .33) ( .67) (0) ( .01) FRUIT 2948* -345 -6 17 683 2612 -2103* -4534* -4692* 10.01 20. 12 . 46 1 .OO 5.65 R ! = . 10 (1617) ( 1966) ( 1684) (2060) ( 1737) (714) (665) (718) (0) (0) ( .63) ( .43) (0) CEREAL 1 10 - 175 284* -297* -19 5 -36 79 5.32 1.91 2 . 39 . 28 1 .87 R ! = .02 (117) (143) ( 123) ( 150) (127) (52) (49) (52) (0) ( • 13) ( .09) ( .97) ( .02) SPECIAL CROP 100 -36 45 30 -31 68 -28 -39 .95 2 . 33 . 53 1 . 57 1 . 44 R !=.01 (99) (119) ( 103) ( 126) ( 106) (44) (41) (44) ( .39) ( .07) ( . 59) ( . 13) ( . 12) HOG 705 - 173 -204 265 1 105 -350 -709* -982* 3.29 3.64 .43 . 22 1 . 22 R 1 = . 01 (714) (868) (744) (910) (767) (315) (294) (317) ( .04) ( .01) ( .65) ( .99) ( .25) POULTRY 76 17 18 17 15 5 -22 12 2.87 .98 .04 . 73 1 .65 R 1 = . 02 (53) (64) (55) . (67) (57) (23) (22) (23) ( .06) ( .40) ( .96) ( .67) ( .06) DRY LAND% .03 - .08 - .02 - .06 .09 . -.04* -.11* - .09* 1 . 77 9.22 .93 . 79 2.60 R » = . 04 ( .05) ( .06) ( .06) (.07) ( .06) ( .02) (.02) (.02) ( • 17) (0) ( .40) ( .61) (0) TOTAL OUTPUT 103984* 1710 22864. -5627 271765 -54873* - 1 12330* - 134460* 6 .05 14.51 .02 1 .02 4.64 R 1 = .08 (51017) (62025) (53128) (64992) (54796) (22517) (20991) (22659) (0) (0) ( .98) ( .42) (0) P r i c e s : R i c e : 14.32 NT$/kg; Sweet P o t a t o : 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; 0range:9.066 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; Hog: 48.258 NT$/kg; P o u l t r y : 129 NT$ per animal T a b l e D.6: MID RICE: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) ( c o n t i n u e d ) annua 1 s h i f t c o e f f i c i e n t s A1972 A1973 A1974 A1975 A1976 A1977 A1978 A1979 RICE -2069** -3623* -3577* -3207* -1839 -675 - 1079* -476 (1106) (1109) (1121) (1119) ( 1 140) (543) (542) (568 ) SWEET POTATO 728** 551 914* 360 173 6 1 -25 143 (410) (411) (415) (414) (422) (201 ) (201 ) (210) SUGAR 3629 4 188 2638 24 13 22 19 - 1449 28 1025 (3554) (3564) (3605) (3594) (3666) ( 1745) ( 1741) ( 1824) VEGETABLES -2463 -1817 -1970 -2208 -2466 -2856 - 1999 -3325** (3601) (361 1) (3652) (3641) (3714) ( 1768) ( 1764) ( 1848 ) ORANGE 839* 225 260 241 244 -1 1 64 -7 (321 ) (322) (325) • (324) (331 ) (157) ( 157) ( 165) FRUIT -592 743 1867 647 819 14 18, 502 722 (2055) (2060) (2084) (2078) (2119) (1009)' (1007) (1054) CEREAL 69 59 1 19 79 144 3 10 -6 ( 150) (150) (152) ( 152) ( 155) (74) (73) (77) SPECIAL CROPS 118 4 24 -10 141 -24 71 19 (125) ( 126) (127) ( 126) (129) (62) (61) (64) HOG -89 -238 -319 -350 -429 -245 - 153 -472 (907) (910) (920) (918) (936) (446) (445) (466 ) POULTRY 38 16 -9 2 4 - 1 52 1 1 (67) (67) (68) (68) (69) (33) (33) (34) DRY LAND% . 14* . 10 . 1 1 . 12** . 1 1 .03 .04 .05 ( .07) ( .07) ( 06) ( .07) ( .07) ( .03) ( .03) ( .03) TOTAL OUTPUT -17064 -45650 -1 1 160 -71481 -33589 -32358 -7432 -56380 (64829) (65013) (65757) (65562) (66872) (31835) (31761) (33272) P r i c e s : R1ce: 14.32 NT$/kg; Sweet P o t a t o : 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; 0range:9.066 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; Hog: 48.258 NT$/kg; P o u l t r y : 129 NT$ per animal T a b l e D.7: SOUTH RICE: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) s i z e and break c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L,1980,FT APT2 APT 1 ALP F-s F-p F-b F-t F RICE -1231* 514 -899 -350 6270 391 609* 884** 1 .45 1 . 27 .98 2 . 38 2 . 33 R 2 = . 04 (725) (922) (718) (951) (760) (421) (416) (475) ( .24) ( .28) ( . 38) ( .02) (0) SWEET POTATO -381 1675* 214 698 -96 396 195 1 145* .95 2 .72 2 . 76 4 .00 6 .59 R ! = . 14 • (G55) (833) (649) (859) (687) (380) (376) (430) ( .39) ( .04) ( .07) (0) (0) SUGAR 8288 -171 7827 -7084 5594 -9537* -5293 -2366 .67 1 .82 .65 1 . 36 1 .45 R ! = .01 (7439) (9459) (7367) (9751 ) (7799) (4318) (4271) (4876) ( .51 ) ( . 14) ( .52) ( .21) ( . 12) VEGETABLES 1 1661* 744 6551* -505 3044 -2632* -6418* -11969* 15 . 77 25.25 . 22 .40 6 . 52 R ! = . 14 (2191) (2786) (2170) (2872) (2297) (1272) ( 1258) ( 1436) (0) (0) ( 80) (0) (0) ORANGE 47 -136 16 16 20 -53* -62 -95 .07 .33 . 77 2 . 82 1 .93 R2 = .03 ( 150) (191) ( 149) ( 196) (157) (87) (86) (98) ( .92) ( .80) ( • 46) (0) ( .02) FRUIT -2050* 885 -2223* 2250** 4723 247 231 265 2 . 56 .08 1 .95 1 .65 1 .90 R 2 = . 03 (1015) (1291) (1005) (1331) (1064) (589) (583) (665) • (.08 ) ( .97) ( . 14) ( .11) ( .02) CEREAL 326* -73 82 5 -12 ' - 143** - 165* -227* 5.55 2.85 . 29 . 54 1 . 47 R !=.01 (128) ( 162) ( 126) ( 167) (134) (74) (73) (84) (0) ( .04) ( .75) ( .82) ( .11) SPECIAL CROP 85 -53 -1 - 10 -84 75 98 38 . 73 1 .83 . 13 1 .07 1.19 R 2 = .01 (114) ( 144) (112) ( 149) (119) (66) (65) (74) ( .48) ( . 14) ( .88) ( .38) ( .27) HOG -87 416 -1032 819 800 775 300 124 1.15 .64 . 22 . 70 .69 R ! =0 (1027) (1307) ( 1018) (1347) ( 1077) (597) (590) (673) ( .32) ( .59) ( .81) ( .70) ( .79) POULTRY 46 2 -7 13 54 40* 9 -4 2 .84 1 .82 .09 . 89 1 .60 R*=.02 (34) (44) (34) (45) (36) (20) (20) (23) ( -06) ( . 14) ( .92) ( . 53) ( .07) BEAN -566* 115 -429** -1 1272 57 41 -73 3.02 . 32 .20 1 .04 1 . 84 R 2 = .02 (230) (293) (228) (302) (241) ( 134) ( 132) (150) ( • 05 ) ( .81) ( .82) ( . 40) ( .03) DRY LAND0/, .07 .02 .02 .06 . 22 - .02 -.06** - . 14* 1 .06 5.18 . 36 . 39 1.41 R2=.01 ( .06) ( .07) ( .06) ( .08) (.06) ( .03) (.03) ( .04) ( .35) (0) ( .70) ( .93) ( . 14) TOTAL OUTPUT 57535 31934 -48471 57889 237641 25316 -26151 -67350 3 .05 1 . 72 . 26 1 .08 1 . 34 R2=.01 (64814) (82414) . (64190) (84958) (67950) (37624) (37217) (42483) ( .05) ( . 16) ( .77) ( .37) ( . 17) P r i c e s : R1ce: 14.32 NT$/kg; Sweet P o t a t o : 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; 0range:9.066 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; Hog: 48.258 NT$/kg; P o u l t r y : 129 NT$ per animal ro T a b l e D.7: SOUTH RICE: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) ( c o n t i n u e d ) annual s h i f t c o e f f i c i e n t s A1972 A1973 A1974 A1975 A1976 A1977 A1978 A1979 RICE -378 149 1362 1001 1746** , 1067** 461 -53 (1040) ( 1034) (996) (991 ) (987) (594) (589) (598) SWEET POTATO 976 1294 2024* 397 -799 372 1 17 120 (940) (935) (899) (895) (892) (536) (533) (540) SUGAR 10102 3070 936 1433 7048 6971 138 14864* (10668) (10608) (10210) (10161) (10124) (6089) (6050) (6130) VEGETABLES -1478 -698 1802 - 1 184 - 1333 -968 -301 -2786 (3142) (3125) (3008) (2993) (2982) ( 1794) ( 1782) ( 1806) ORANGE 98 63 516* 60 52 -4 -3 -2 (215) (214) (206) (206) (204) (123) (122) (124) FRUIT -337 1* -3418* -3467* -3404* -2886* -1651* 352 - 1 1 16 (1456) ( 1448) ( 1393) ( 1387) (1381 ) (831 ) (826) (836) CEREAL 100 -19 34 102 58 40 36 166 (183) ( 182) (175) • ( 174) (174) ( 105) (104) ( 105) SPECIAL CROPS 244 292** 93 103 138 39 125 47 (162) ( 162) ( 156) ( 155) (155) (93) (92) (94) HOG 84 -207 -504 . -326 -375 483 1462 - 182 ( 1474) ( 1465) (1410) ( 1404) ( 1399) (841 ) (836) (847) POULTRY -20 -46 -53 -49 -56 -46 -57* -57* (49) (49) (47) (47) (47) (28) (28) (28) BEAN -235* 41 -60 -233 53 • 147 366** 144 (330) (328) (316) (314) (313) ( 188) (187) ( 190) DRY LAND% -.03 - .05 - .04 • - .04 - .05 - .06 -.04 .01 (.08) ( .08) ( .08) (.08) ( .08) ( .05) ( .05) ( .05) TOTAL OUTPUT -15501 -49721 -50256 -56677 -40090 24774 . 89710 -51639 (92954) (92428) (88963) (88533) (88216) (53058) (52712) (53415) P r i c e s : R1ce: 14.32 NT$/kg; 0range:9.066 NT$/kg; Hog: 48.258 NT$/kg; Sweet Pota t o : 3.668 NT$/kg; Sugar: .795 NT$/kg; V e g e t a b l e s : 6.531 NT$/kg; F r u i t : 9.022 NT$/kg; C e r e a l : 9.664 NT$/kg; S p e c i a l Crop: 11.83 NT$/kg; P o u l t r y : 129 NT$ per animal ro ro oo T a b l e D.8: SUGAR: SELECTED OUTPUT AMOUNTS per HECTARE: DUMMY VARIABLE REGRESSION (Kg/ha) s i z e and break c o e f f i c i e n t s base p a r t i c i p a t i o n c o e f f i c i e n t s h y p o t h e s i s t e s t s AS ASB AM AMB L,1980,FT APT2 APT 1 ALP F-s F-p F-b F-t F RICE -974 765 -855 503 3289 165 -694 -1218* 1 . 33 3.18 . 49 1 . 77 2.17 R !=.03 (619) (773) (641) (822) (631 ) (459) (408) (450) ( .27) ( .02) ( .61) ( 08) ( .01) SWEET POTATO 598 1027 136 1 174 32 615 -65 932 . 17 .67 . 33 1.14 1.91 R'=.02 (1169) ( 1461 ) (1211) (1553) (1 192) (866) (771 ) (850) ( .84) ( .57) ( .72) ( . 33) ( .02) SUGAR -994 8043 -3997 8973 28692 2696 -5641 -671 1 . 22 1 . 37 .64 1.31 .96 R !=.01 (6506) (8132) (6738) (8645 ) (6636) (4822) (4289) (4733) ( .80) ( .25) ( .53) ( . 23) ( . 50) VEGETABLES 7236* -4697* 3765* -2258 5691 -2893* -3294* -2392* 10.94 4.13 2.98 . 78 3 . 39 R z=.05 ( 1572) ( 1966) ( 1629) (2089) (1604) (1165) (1037) ( 1 144) (0) ( .01) ( .05) ( -63) (0) ORANGE 1879* - 148 278 606 -883 505 -239 -493 4 . 52 . 86 . 42 1 .07 1 . 58 R'=.02 (746) (932) (773) (991 ) (761 ) (553) (492 ) (543) ( .01) ( .47) ( .66) ( . 38) ( .07) FRUIT 1048 -62 939 -837 3358 - 1210* -1220* - 1345* . 89 2.67 . 43 2.11 2.11 R !=.03 (818) (1023) (847) ( 1087) (835) (606) (539) (596) ( .41) ( .05) ( .65) ( .03) ( .01) CEREAL -267 457** -291 225 886 4