The Economic Efficiency of Farmers Growing High‐Yielding, Irrigated Rice in India

Abstract

The high-yielding varieties program has been operating for some fifteen years in India. As a result, the technology is no longer a new technology, particularly for irrigated rice farmers. The issue addressed in this paper, therefore, is whether farmers producing high-yielding varieties (HYV) of rice are doing so in an.economically efficient manner, or do substantial opportunities remain to increase the efficiency of the farmers' application of modern rice technology? To get an empirical answer and to assess better the economic performance of farmers, a study area was chosen to approach ideal field conditions for implementation of the program. Economic performance can be measured by comparing the economic efficiencies of farmer groups (small and large). The profit function developed by Yotopoulos and Lau is used as an analytical tool to examine economic efficiency, including technical and price efficiency. For the empirical estimation of profit and variable factor demand functions, a random sample of seventy farmers growing a HYV IR20 in rabi (winter) season 1977/78 was selected from a progressive village in the Coimbatore district, Tamil Nadu, a favorably placed area in terms of irrigation, administration, paddy varieties, and other such factors. The total population of the village, Seyyampalayam, consisted of about 55% of farmers having operational holdings of 1 hectare or less with an average of 0.64 hectare; the other 45% had operational holdings of above 1 hectare with an average of 2.79 hectares. Accordingly, equal representation was given to both groups (35 farmers each) in our random sample, defining a larger farmer as one with more than 1 hectare.