The Malaysian government's policies of price support and subsidies for rice production, free fertilizers and provision of agricu ltural extension services have enabled the farm ers to increase rice output over tim e, particularly after 1984. The Muda A gricultural D evelopm ent A uthority (M A D A) im proved the efficiency of water distribution and w ater use by investm ents in tertiary canals and farm roads and by improved data feedback systems. The farmers have also responded to labour and water shortages by adopting direct seeding in place of transplanting of rice and by integrated pest management practices. This paper presents a description of levels and changes in productivity and profitability of paddy production in the M uda irrigation scheme in Malaysia. It has been noted that, over the 1980s, there w as a substantial reduction in rainfall and overall availability of water resources for irrigation in the region. Despite these adverse factors, farm ers were able to increase total crop output by about 16% over the decade (1980-82 to 1990-91). Paddy output per unit of w ater released from the reservoirs increased by alm ost 45% in that period. The cost of production of paddy declined marginally over time for land owners as a result of reduced labour costs for transplanting rice. For tenants, the cost of production increased by about 17% owing to a substantial (50%) rise in land rents. H ence, higher yields have not resulted in higher incomes for farm ers despite an increase in output price subsidies.
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