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Econometric Researches: Rice Economy, Poverty and Income Distribution, Fishery Economics
Transformations in the Lowland Rice-based Ecosystems in Nyaungdon Township, Myanmar: Implications for Farmers Productivity and Incomes
Yolanda T. Garcia
IRRI Consultant, CESD and Professor Department of Economics, UP Los Banos
Mahabub Hossain
Former Head, IRRI-SSD and Executive Director BRAC, Bangladesh
Arnulfo G. Garcia
Former IRRI Representative (Myanmar) Retired and Fellow, APPC
Daw Marlar Oo
Staff Officer DAP, MOAI IRRI Thursday Seminar September 20, 2012
Outline of Presentation
Objectives of the study Farm Productivity transformations Changes in Poverty status Sources of Income Inequality Policy Implications
2. Trace the movement of poverty indicators over the two periods; 3. Measure income inequality and identify the sources of income inequality over the two periods.
Where: RTS - returns to scale; sum of the output elasticities j of the production function j - slope parameter (output elasticities) of the production function j - ratio of individual output elasticity to RTS; j= j /j Xj - change in the use of input j Sj - share in cost of input j; Sj= wjxj/wjxj
Technological Change Effect = captures the growth in productivity due to adoption of new technologies ; Technical Efficiency Effect = captures the growth in productivity due the improvement of farmers management practices; Scale Effect = accounts for TFP growth due to changes in the returns to scale of farm operations; Price Effect = represents the change in TFP brought about by the deviation of input prices to the value of their marginal product.
Source: Fioramante, 2009. Estimation and Decomposition of Total Factor Productivity Growth in the EU Manufacturing Sector: A Stochastic Frontier Approach
Annual growth in total factor productivity (TFP) by components and location (monsoon season)
Total Factor Location and Seasons Productivity (%) Monsoon Rice a. Natpay b. Htonewa c. Tazin Ye Kyaw d. Tuchaung e. All Sites Technological Change Effect (%) 0.04 0.15 1.25 0.36 0.43 Technical Efficiency Effect (%) 0.27 1.52 0.84 -0.11 0.69 Scale Effect (%) 0.01 -0.17 -0.16 0.02 0.01 Price Effect (%) 0.19 -0.30 -046 0.49 0.47
Natpay & Tuchaung have lower growth in TFP (1%) since they already have high yields to start with, hence increasing it further will be more difficult. Natpay: Yield CY 1994-95 2.52 Tuchaung: Yield CY 1994-95 2.71 Yield CY 2003-04 2.50 Yield CY 2003-04 2.69 On the othe hand, Tazin and Htonewa showed higher growth in TFP (over 1% but <1.5%) since their base yield was relatively low, therefore a small increase in yield will show significant increase in TFP growth Tazin : Yield CY 1994-95 2.01 Htonewa: Yield CY 1994-95 2.10 Yield CY 2003-04 2.38 Yield CY 2003-04 2.52 Maximum recorded yield during the monsoon season: 4.1 tons/hectare
Total Factor Location and Seasons Productivity (%) II. Summer Rice a. Tuchaung 7.96
Decomposition of the growth in TFP was only calculated for Tuchaung since there were very few farmers that cultivated summer rice in Htonewa and Tazin in 2004 (less than 5 households). Major sources of TFP growth: Technological change Note: Maximum recorded yield during the summer season: 4.5 tons/hectare Tuchaung was a model village for summer rice
All TE were found to increased significantly except in Tuchaung where it was found to be negative but statistically non-significant.
c.. Htonewa
-3.04
-4.64
a. Tuchaung
3.21
Price efficiency occurs when i=Si VMPPinput If iSi Input use is not price efficient Favorable condition, MP is higher than cost, can increase use i>Si Unfavorable condition, MP is lower than cost, must decrease use i>Si
B. Unfavorable Environment
To increase productivity, technical efficiency needs to be improved thru more extension and technical assistance to farmers.
Poverty Status: Increasing poverty Natpay (7%) and Htonewa (1%) Decreasing poverty Tuchaung (-5%) and Tazin Ye Kyaw (-6%)
Poverty incidence increased from 25% (1996) to 32% (2004) The movement in and out of poverty had been extensive
- 15% poor in 1996 were no longer poor in 2004 - 22% non-poor in 1996 became poor in 2004
Poverty incidence decreased from 35% (1996) to 30% (2004) The movement in and out of poverty:
- 27% poor in 1996 were no longer poor in 2004 - 22% non-poor in 1996 became poor in 2004
Poverty incidence hardly changed (23% to 24%) from 1996 to 2004 The movement in and out of poverty:
- 16% poor in 1996 were no longer poor in 2004 - 17% non-poor in 1996 became poor in 2004
Poverty incidence decreased from 31% (1996) to 25% 2004 The movement in and out of poverty:
- 23% poor in 1996 were no longer poor in 2004 - 17% non-poor in 1996 became poor in 2004
Lower Gini ratio indicates more equitable income distribution Tuchaung and Htonewa had decreasing Gini ratios But Natpay and Tazin had increasing Gini ratios
% share % share HH Pseudo Absolute Relative HH Pseudo Absolute Relative Income Gini share share Income Gini share share
1996: Largest contributor to income inequality was rice income Non-farm income had the smallest contribution 2004: Largest contributor was the non-farm income
Contribution of the rice income declined from 33 to 27 percent Contribution of farm labor almost disappeared (from 12 to 1 percent) But contribution on nonfarm income increased from 3 to 41 percent
% share % share HH Pseudo Absolute Relative HH Pseudo Absolute Relative Income Gini share share Income Gini share share
1996: Largest contributor to income inequality is rice income Non-farm income has the smallest contribution 2004: Largest contributor is the non-farm income
Contribution of the rice income is relatively the same Contribution of farm labor declined from 21 to 13 percent But contribution of nonfarm income increased from 6 to 34 percent
% share % share HH Pseudo Absolute Relative HH Pseudo Absolute Relative Income Gini share share Income Gini share share
1996: Largest contributor to income inequality is rice income 2004: Largest contributor is the non-farm income Contribution of the rice income declined from 19 to 11 percent Contribution of farm labor declined from 9 to 2 percent But contribution of nonfarm income increased from 14 to 20 percent
Gini Decomposition Tazin Ye Kyaw 1996 and 2004 (Increasing Gini ratio)
CY 1994-95 Sources of Income Crop Income Rice Non-rice Homestead Farm Labor Nonfarm income 0.23 0.13 0.19 0.30 0.15 0.59 0.62 0.76 0.15 0.17 0.14 0.08 0.15 0.04 0.02 0.32 0.18 0.34 0.10 0.06 0.28 0.10 0.09 0.12 0.41 0.61 0.53 0.58 0.04 0.37 0.17 0.05 0.05 0.00 0.15 0.39 0.13 0.13 0.01 0.35 CY 2003-2004
% share % share HH Pseudo Absolute Relative HH Pseudo Absolute Relative Income Gini share share Income Gini share share
1996: Largest contributor to income inequality is homestead and rice income Nonfarm income has the smallest contribution 2004: Largest contributor is the rice and non-farm income Contribution of the rice income increased from 32 to 39 percent Contribution of farm labor declined from 10 to 1 percent But contribution of nonfarm income increased from 6 to 35 percent