Landholding, Agricultural Modernization, and Income Concentration: A Mexican Example

Abstract

In a recent article analyzing consequences of agricultural change in the Indian Punjab, Nicholson argues that, although income inequality is increasing, the increase is due neither to changing agricultural technology nor to bias in the cooperative credit institutions.1 He proposes instead that the use of high-yielding varieties (HYVs) of wheat has slowed down a tendency to increased land concentration brought on by population increase and that the adoption of HYVs is not significantly affected by farm size but, rather, by access to secure irrigation. It is possible to clarify several aspects of the Nicholson model, as well as to question other aspects, using data from three states in Mexico during a period when similar changes in agricultural technology were occurring. As with wheat in the Punjab, the adoption of hybrid corn in Mexico is uncorrelated with farm size; in addition, rates of mechanization and fertilizer use are not found to be affected by farm size. However, patterns of farm income concentration are found to be affected in several ways by the adoption of certain modern technologies in settings of landholding inequality. Furthermore, the impacts of rural credit institutions in Mexico are quite different from the Punjabi case.