Mahmood Hasan Khan

Effects of Farm Size on Economic Efficiency: The Case of Pakistan

Many agricultural policy decisions in underdeveloped countries are affected by the belief that the price of increased equity is reduced growth. An important argument used frequently against land reforms, for example, is that large farms are more efficient than small farms. If true, land reforms cannot achieve the dual goals of equity and efficiency. The relative efficiency of large farms, however, may be an illusion if national policies have consistently favored these farms in such a way that their apparent relative efficiency is due to market imperfections in which specific public policies have played a crucial role (Berry and Cline, Griffin). It is evident that better information on the true relative efficiency of large farms would provide a better indication of how agrarian structures affect resource use and thereby of the likelihood of being able to achieve both growth and equity. This paper provides such information for Pakistan. The concept of efficiency has been interpreted in various ways. An operational concept of economic efficiency has been developed by Lau and Yotopoulos (1971, 1972) and Yotopoulos and Lau, to measure and compare performance of farm firms. Differences in economic efficiency among groups of farms (say large and small) may result from variations in technical efficiency (larger output with equal amounts of inputs) and price efficiency (higher profits). Profit maximization is implied if the value of marginal product of each variable input is equal to its price. Thus we can test relative economic efficiency of large versus small farms by comparing their actual profit functions. Although the question of relative economic efficiency of large farms is central to a discussion of land reform in underdeveloped countries, there is little empirical research due to lack of adequate disaggregated data. Some evidence for India has been presented by Yotopoulos and Lau (1973), indicating that small farms are more efficient than large farms. However, in studies by Sidhu for wheat in the Indian Punjab and by Khan and Maki for wheat and rice in Pakistan, there was no difference in efficiency by farm size. In this paper, the Lau-Yotopoulos model is used to derive values of technical and price efficiency parameters in order to identify and isolate possible differences between large and small farms. These estimates are based on farm-level data collected from a sample of 728 farms in the Punjab and Sind provinces of Pakistan. Because there are wide differences between these provinces in their agrarian structures, any conclusi ns drawn from the overall sample would be of dubious value. We, therefore, present estimation re ults for the provincial samples separately.

Rural Poverty in Developing Countries; Issues and Policies

In most developing countries, poverty is more widespread and severe in rural than in urban areas. The author reviews some important aspects of rural poverty and draws key implications for public policy. He presents a policy framework for reducing poverty, taking into account the functional differences and overlap between the rural poor. Several policy options are delineated and explained, including stable management of the macroeconomic environment, transfer of assets, investment in and access to the physical and social infrastructure, access to credit and jobs, and provision of safety nets. Finally, some guideposts are identified for assessing strategies to reduce rural poverty.

When is Economic Growth Pro-Poor? Experiences in Malaysia and Pakistan

This paper focuses on two central issues related to the contrasting experiences of Malaysia and Pakistan regarding poverty reduction. First, it examines the structure of economic growth and its proximate determinants in the two countries, including the initial conditions, institutional changes, and macroeconomic policies. Second, it analyzes the links between economic growth and poverty reduction, particularly focusing on public policy mechanisms to reduce poverty and inequality. Malaysia, unlike Pakistan, was able to sustain rapid economic growth with equally impressive reduction in poverty because the governments included the poverty reduction goal in national development plans and pursued policies consistent with the twin goals.

Impact of Agricultural Research and Extension on crop productivity in Pakistan: A production function approach

Abstract This study analyzes the contribution that agricultural research and extension made to crop productivity in Pakistan from 1955 to 1981. Using a production function approach, it estimates the (marginal) internal rate of return to these activities. The estimated rate of around 36% is in the range reported for other countries. Considering this high rate of return and the low public spending on agricultural research and extension in Pakistan, the obvious policy recommendation is to allocate more and higher quality resources to these activities to facilitate a rapid increase in agricultural productivity.

Land productivity, farm size and returns to scale in Pakistan agriculture

Abstract It is by now a commonly accepted proposition that economic development must involve both growth and equity. That in many countries the subsidization of the owners of large farms is inequitable is also acknowledged. However, the debate on the ‘efficiency’ of large versus small farms continues. If the owners of large farms are not using the crop acreage with greater efficiency than are the small farmers and if there are no economies of scale, then the imposition of ceilings on farm size and land redistribution are clearly the right options to consider. The object of this study is to test two hypotheses. First, there is an inverse relationship between land productivity and farm size. Second, there are no economies of scale in agricultural production. The tests are performed by regression analysis on the farm-level data collected from Pakistan by the author in 1974. The merit of this study is that it deals with a country which, with a few other underdeveloped countries, has been a beneficiary of the ‘Green Revolution’. The available studies on Pakistan agriculture are limited to the aggregate analyses. Interregional micro-level studies are almost non-existent.

Economic Performance, Structural Reforms and Government Budgets in Pakistan

ABSTRACT This study focuses on four major issues in view of the severity of the political and economic problems faced by Pakistan in the last ten to fifteen years. First, it sketches the context in which economic problems and policies can be understood. Second, it reviews Pakistans economic performance and advances some explanations. Third, it examines the structural adjustment program in relation to the management and performance of the economy. Finally, it analyzes the changes in government fiscal policy and the ongoing problem of budget deficit in the context of resource mobilization for economic growth on a sustainable basis. A concluding section highlights the relationships between economic reforms and the economys performance.

Welfare implications of sugar pricing in Pakistan

Abstract The sugar industry in Pakistan has been highly protected since the mid- 1970s. The nature of support prices has ensured a high private return to investment in sugarcane — despite the high cost of production resulting from low and stagnant yield levels and low sucrose content. Estimates of welfare gains and losses cast doubt on the social profitability of this protection. Government policy should encourage increased output through higher yield levels and sugar recovery, and consumers should stop subsidizing an in-efficient industry.