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The Effects of Price-support Programme on Farm Tenancy Patterns and Farm Profitability: Some Evidence from Malaysia

Author

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  • Naziruddin Abdullah

    (International Islamic University, Gombak, Selangor Darul Ehsan, Malaysia.)

Abstract

Translog normalised restricted profit function model is specified and estimated for the four rice granary areas, each administered by a local government body, namely, the MIP, the KIP, the NWSP, and the KEIP, in which the price-support programme has some noticeable effects on farm tenancy and farms profitability. So far, there have been no empirical studies that have used this methodological framework to analyse such economic phenomenon in Malaysia. This, in fact, is the main contribution of the present paper. From the estimated function, the shadow values of land and labour are computed, which in turn are used to elucidate the behaviour of rice farmers in Malaysia. Together, the estimated and computed results, to a large extent, are successful in explaining the observed changes in farm tenancy patterns and the way the farmers (comprised of owneroperator, owner-tenant, and tenant-farmer) are “economically” responding to the sum of profits generated from rice farming and, subsequently, from the programme. Further, given the price-support programme, the results also point to the fact that rice farming in Malaysia is as lucrative a job as any other sub-sector outside this, in particular unskilled urban workers and electronics workers, and thus this programme could be pursued further.

Suggested Citation

  • Naziruddin Abdullah, 2000. "The Effects of Price-support Programme on Farm Tenancy Patterns and Farm Profitability: Some Evidence from Malaysia," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(1), pages 51-72.
    • Handle: RePEc:pid:journl:v:39:y:2000:i:1:p:51-72
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    File URL: http://www.pide.org.pk/pdf/PDR/2000/Volume1/51-72.pdf
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    References listed on IDEAS

    as
    1. Bardhan, P K & Srinivasan, T N, 1971. "Cropsharing Tenancy in Agriculture: A Theoretical and Empirical Analysis," American Economic Review, American Economic Association, vol. 61(1), pages 48-64, March.
    2. Haughton, Jonathan, 1986. "Farm price responsiveness and the choice of functional form : An application to rice cultivation in West Malaysia," Journal of Development Economics, Elsevier, vol. 24(2), pages 203-223, December.
    3. B. Delworth Gardner & Rulon D. Pope, 1978. "How is Scale and Structure Determined in Agriculture?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(2), pages 295-302.
    4. Robert W. Herdt & Willard W. Cochrane, 1966. "Farm Land Prices and Farm Technological Advance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 48(2), pages 243-263.
    5. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "Multilateral Comparisons of Output, Input, and Productivity Using Superlative Index Numbers," Economic Journal, Royal Economic Society, vol. 92(365), pages 73-86, March.
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    Cited by:

    1. Muhammad Irfan, 2010. "A Review of the Labour Market Research at PIDE 1957-2009," PIDE Books, Pakistan Institute of Development Economics, number 2010:1 edited by Rashid Amjad & Aurangzeb A. Hashmi.

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