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Production and Income Distribution Effects of High-Yielding Rice Varieties in Java, Indonesia
Thesis Abstract:
The study attempted to analyze the impact of high-yielding rice varieties (HYV) on the farmer’s paddy production, farm family income and income distribution in Java for the wet seasons 1968-69, 1969-70 and 1970-71. Analysis was based on data on 600 paddy farms gathered by the Agro Economic Survey of Indonesia (SAE), covering 20 villages.
Results of the least square estimates based on the Cobb-Douglas type of production function generally indicated a neutral upward shift in rice production function from the LV (local varieties) to the HYV. This meant that the technological change in rice production function at the farm level was not biased towards labor-intensive nor land-intensive direction.
Analysts of resource-use efficiency showed only a few significant inefficiencies in the use of factor inputs for rice production, implying that the appropriate strategy for increasing rice production lies in the improvement of the quality of production factors and not in the mere reallocation of resources.
Average family income increased by only about 16% from 1968-69 to 1970-71/ More than 58% of the farm family income in 1968-69 and about 71% of that in 1970-71 were derived from the paddy enterprise, while the rest came from other sources.
Inequality in farm family income declined considerably from 1968-1969 to 1970-71. However, the change in the distribution of paddy income seemed to be towards a greater relative share for the lowest deciles and a greater inequality beyond the 9th decile.
The adoption of new rice technology was not statistically significant in explaining the change in the inequality of farm family income. Changes in the mean level of farm income and in the relative variance of landholding turned out to be significantly associated with change in income distribution.
The mean and relative variance of expenditures for modern inputs, such as seeds fertilizer and perticides, significantly went up during the period of study. This meant that a greater proportion of the increase in the adoption of new rice technology was among farm families in the upper decile groups. Landholding distribution, however, improved significantly.
Income inequality declined in spite of the significant increase in the relative variance of the expenditures for modern farm inputs. This suggests that the unfavorable effect of the increasingly disparity in the adoption of new technology in favor of the upper decile groups was offset by the stronger and favorable effect of better land distribution.