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Transformations in the lowland rice-based ecosystems in Nyaungdon Township, Myanmar: Implications for farmer productivity and income

Rice Seminar Series Yolanda T. Garcia, PhD


Current position
IRRI Consultant, CESD and Professor, Department of Economics College of Economics and Management University of the Philippines Los Banos

Education and training


BS Statistics, UPLB, 1979 MS Agricultural Economics, UPLB, 1981 PhD Agricultural Economics, UPLB, 1997

Work experience
University Professor Economist/Researcher

Research highlights
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

The IRRI- MAS Survey


In 1996, IRRI, together with the MAS of the MOAI, conducted a joint-survey on the livelihood and productivity of rural farm households in Nyaungdon Township, Ayeyarwardy Division to gather benchmark data on the three newly introduced rice-based technologies: summer rice (or double rice cropping) rice-fish 2 monsoon cropping (or triple rice cropping) In 2004, the research team resurveyed the same study sites using the same questionnaire to determine the impact of the new technologies that were introduced in the early 90s. In Nov 2009, the research team re-visited the project sites and conducted KIIs & FGDs to gather additional information and validate some initial results of the study. Note: The validation KIIs and FGDs activities were funded jointly by SEARCA and IRRI-SSD

The Study Areas


4 Villages in Nyaungdon Township, Ayeyarwardy Division Favorable Environment Upper terrace/Rainfed lowland (Nat Pay village) terrace/Rainfed Middle terrace (Tuchuang village) (Tuchuang Unfavorable Environment Middle to lower terrace (Tazin Ye Kyaw village) (Tazin Lower terrace & deepwater (Htonewa village) (Htonewa Sample villages represented diversity of ecosystem Total enumeration of households surveyed with a structured questionnaire in 1996 and 2004 1996 - Crop Year 1994-95 19942004 - Crop Year 2003-04 2003-

OBJECTIVES OF THE STUDY


The general objective of the study was to determine the changes in the productivity of rice cultivation in the different lowland rice ecosystems and incomes of farm households over the two periods 1996 and 2004. Specifically the study aimed to: 1. evaluate the sources of growth in total factor productivity (TFP) and decomposed it into technological change (TC), farmers efficiency (TE), scale effect (SE) and price effect (PE);

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.

Decomposition of Total Factor Productivity

Measurement of Total Factor Productivity


TFP = TC + (RTS -1) j Xj + T + (j-Sj ) Xj
Scale Effect Technical Efficiency Price Effect Effect Technological Change Effect

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

0.89 1.20 1.47 0.75 1.59

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

Annual growth in TFP by components and location (monsoon season)


Total Factor Location and Seasons Productivity (%) Monsoon Rice a. Natpay b. Tuchaung c. Htonewa d. Tazin Ye Kyaw Technological Change Effect (%) 0.04 0.36 0.15 1.25 Technical Efficiency Effect (%) 0.27 -0.11 1.52 0.84 Scale Effect (%) 0.01 0.02 -0.17 -0.16 Price Effect (%) 0.19 0.49 -0.30 -046

0.89 0.75 1.20 1.47

Largest Component of growth in TFP


1. Favorable Environment : - Natpay technical efficiency (TE) effect and price effect (PE) - Tuchaung technological change (TC) and price effect (PE) 2. Unfavorable Environment: - Tazin technological change (TC) and technical efficiency (TE) - Htonewa technical efficiency (TE) Note: Natpay was the control village

Annual growth TFP by components and location, summer rice


Technological Change Effect (%) 7.11 Technical Efficiency Effect (%) 0.35 Scale Effect (%) 0.18 Price Effect (%) 0.32

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

Technical Efficiency by cropping season 1996 and 2004


Location and Seasons I. Monsoon Rice a. Natpay 92.53 b. Tuchaung 92.85 c.. Htonewa 67.24 d. Tazin Ye Kyaw 79.42 II. Summer Rice a. Tuchaung 74.48 77.97 3.49* 87.85 8.43** 82.45 15.21** 91.72 -1.13ns 95.20 2.67** TE 1996 (%) TE 2004 (%) Change in TE (%)

All TE were found to increased significantly except in Tuchaung where it was found to be negative but statistically non-significant.

Price Effect by cropping season 1996 and 2004


Location and Seasons I. Monsoon Rice a. Natpay b. Tuchaung 1.90 4.89 Area, seeds, machine power, fertilizer Area, seeds, fertilizer, labor Area, seeds, fertilizer, animal power Area, seeds, fertilizer Area, seeds, fertilizer, animal power labor and animal power Machine and animal power Labor and machine power labor, machine and animal power labor, machine power Price Effect (sum) Sources of Price Inefficiency i>Si i<Si

c.. Htonewa

-3.04

d. Tazin Ye Kyaw II. Summer Rice

-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

Policy Implication Growth in Total Factor Productivity


A. Favorable Environment:
1. Technological change was an important component in TFP growth. This implies that the introduction of summer rice was successful. At the same time, the new technology trickled down to the monsoon crop thru the use of MV, better water control and fertilizer use. 2. Production can be further increased by more efficient allocation of inputs: - Increasing the use of inputs where price effect was positive, e.g., area, seeds, fertilizer use (this suggest input intensification)

B. Unfavorable Environment
To increase productivity, technical efficiency needs to be improved thru more extension and technical assistance to farmers.

Movements in Poverty 1996-2004

Poverty Incidence 1996 and 2004


Villages a. Natpay 25 b. Tuchaung 35 c.. Htonewa 23 d. Tazin Ye Kyaw 31 25 -6 24 1 30 -5 32 7 Poverty Incidence Poverty Incidence Change in Poverty 1996 (%) 2004 (%) Incidence (%)

Poverty Status: Increasing poverty Natpay (7%) and Htonewa (1%) Decreasing poverty Tuchaung (-5%) and Tazin Ye Kyaw (-6%)

Movement of households in poverty scale 1996-2004 (Natpay) 1996(Natpay)


Poverty status, 1996 (% households) Poor Poor NonNon-poor Total 10 22 32 Poverty status, 2004 (% households) Non-poor Non15 53 68 Total 25 75 100

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

More became poor

Only 10% of the households were chronically poor

Movement of households in poverty scale 1996-2004 (Tuchaung) 1996(Tuchaung)


Poverty status, 1996 (% households) Poor Poor NonNon-poor Total 8 22 30 Poverty status, 2004 (% households) Non-poor Non27 43 70 Total 35 65 100

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

More became nonpoor

Only 8% of the households were chronically poor

Movement of households in poverty scale 1996-2004 (Htonewa) 1996(Htonewa)


Poverty status, 1996 (% households) Poor Poor NonNon-poor Total 7 17 24 Poverty status, 2004 (% households) Non-poor Non16 60 76 Total 23 77 100

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

Same poverty status

Only 7% of the households were chronically poor

Movement of households in poverty scale 1996-2004 (Tazin Ye Kyaw) 1996(Tazin Kyaw)


Poverty status, 1996 (% households) Poor Poor NonNon-poor Total 8 17 25 Poverty status, 2004 (% households) Non-poor Non23 52 75 Total 31 69 100

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

More became nonpoor

Only 8% of the households were chronically poor

Policy Implication Poverty Situation


The core poor (ranging from 7 to 10 percent) were generally coming from the agricultural labor sector, workers without land to cultivate. Although the non-agricultural labor market is still a small sector in Nyaungdon Township, it presents employment opportunities, especially for the agricultural landless workers, which can help alleviate their poverty status Example: Introduction of aquaculture in Tazin Ye Kyaw which originated from the rice-fish culture Many rice farmers became workers in the fish farms

Income Distribution and Sources of Income Inequality

Gini Ratio of Per Capita Household Income CY 1994-95 & CY 2003-04


GINI Ratio Villages 1994-95 Favorable Environment Natpay (Rainfed) Tuchaung (Middle terrace) Unfavorable Environment Tazin (Lower terrace) Htonewa (Deepwater) 0.42 0.59 0.43 0.49 2.4% -16.9% 0.42 0.43 2003-04 0.49 0.40 Growth 16.6% -7.0%

Lower Gini ratio indicates more equitable income distribution Tuchaung and Htonewa had decreasing Gini ratios But Natpay and Tazin had increasing Gini ratios

Gini Decomposition Natpay 1996 and 2004 (Increasing Gini ratio)


CY 1994-95 Sources of Income Crop Income Rice Non-rice Homestead Farm Labor Nonfarm income 0.22 0.23 0.20 0.24 0.12 0.64 0.59 0.43 0.21 0.09 0.14 0.13 0.08 0.05 0.01 0.33 0.32 0.20 0.12 0.03 0.21 0.18 0.12 0.12 0.37 0.63 0.59 0.38 0.03 0.55 0.13 0.10 0.05 0.00 0.20 0.27 0.21 0.10 0.01 0.41 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 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

Gini Decomposition Tuchaung 1996 and 2004 (Decreasing Gini ratio)


CY 1994-95 Sources of Income Crop Income Rice Non-rice Homestead Farm Labor Nonfarm income 0.25 0.13 0.13 0.34 0.16 0.59 0.64 0.65 0.26 0.17 0.15 0.08 0.08 0.09 0.03 0.34 0.19 0.19 0.21 0.06 0.31 0.10 0.09 0.14 0.36 0.76 0.80 0.77 0.71 0.70 0.24 0.08 0.07 0.10 0.25 0.32 0.11 0.09 0.13 0.34 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 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

Gini Decomposition Htonewa 1996 and 2004 (Decreasing Gini ratio)


CY 1994-95 Sources of Income Crop Income Rice Non-rice crop Homestead Farm Labor Nonfarm income 0.13 0.33 0.08 0.31 0.15 0.64 0.77 0.17 0.13 0.44 0.08 0.25 0.01 0.04 0.06 0.19 0.56 0.03 0.09 0.14 0.10 0.59 0.03 0.09 0.20 0.55 0.57 0.53 0.14 0.52 0.05 0.33 0.01 0.01 0.10 0.11 0.64 0.03 0.02 0.20 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 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

Policy Implication Income Inequality


Over time, the non-agricultural income had evolved to be the major source of income inequality. Non-agricultural livelihood: trading, transport operation, construction and professional services, fish farming Note: Some degree of income inequality is conducive to economic growth (i.e., monetary reward to economic activities), as long as it is not excessive. This suggests that the agricultural laborers has better chances for employment thru the development of the non-agricultural sector. For example: the shifting of Tazin from rice-fish technology to pure aquaculture had created a new labor market.

Thank You For Your Attention

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