Growth Pattern of Burmese Agriculture: A Productivity Approach 9789814376730

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Occasional Paper No . 81

Growth Pattern of Burmese Agriculture

The Institute of Southeast Asian Studies was established as an autonomous organization in May 1968. It is a regional research centre for scholars and other specialists concerned with modern Southeast Asia, particularly the multi-faceted problems of stability and security, economic development, and political and social change. The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer. The ASEAN Economic Research Unit is an integral part of the Institute, corning under the overall supervision of the Director who is also the Chairman of its Management Committee. The Unit was formed in 1979 in response to the need to deepen understanding of economic change and political developments in ASEAN. The day-to-day operations of the Unit are the responsibility of the Co-ordinator. A Regional Advisory Committee, consisting of a senior economist from each of the ASEAN countries, guides the work of the Unit.

Growth Pattern of Burmese Agriculture A Productivity Approach

Mya Than

ASEAN ECONOMIC RESEARCH UNIT

INSTITUTE OF SOUTHEAST ASIAN STUDIES

Cataloguing in Publication Data Mya Than Growth pattern of Burmese agriculture: a productivity approach. (Occasional paper I Institute of Southeast Asian Studies; no. 81) I. Agricultural productivity - Burma. 2. Agriculture - Economic aspects - Burma. I. Institute of Southeast Asian Studies. II. Title. II I. Series. DS501 159 no. 81 1988 ISBN 9971-988-84-4 ISSN 0073-9731

Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Singapore 05ll All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies.

© 1988 Institute of Southeast East Asian Studies The responsibility for facts and opinions expressed in this publication rests exclusively with the author and his interpretations do not necessarily reflect the views or the policy of the Institute or its supporte1s. Typeset by Art Communication Workshop Printed in Singapore by Kim Hup Lee Printing Co. Pte. Ltd .

Contents List of Tables List of Figures I Introduction General Framework of Study Conceptual Framework of Productivity Institutional Framework of Input Supply II Growth of Agricultural Production and Inputs Growth of Agricultural Production Growth of Inputs III Productivity and Its Relationships Productivity Relationships between Net Agricultural Output and Productivity Relationships among Productivities Relationships between Land and Labour Productivities and Input Factors IV Contributions of Inputs to Land Productivity and Overall Growth of Agricultural Output Contribution of Inputs to Land Productivity Contribution of Inputs to Total Net Output V Conclusions Notes References

vi vii

1 2 3 9 9 9

18 18

19 21

26 37 37 38

40 42 43

List of Tables 1. Government Procurement Prices of Padd y (Ngasein), 1970/71 to 1985 / 86 Government Agricultural Loans 2. 3. Size Distribution of Farms, 1985 / 86 4. Total Net Value of Agricultural Output 5. Input Factors 6. Productivities in Burmese Agri culture 7. Estimated Indexes of Agricultural Input and Output 8. Correlation Matrix 9. Multiple Regression 10. Contribution of Inputs to Land Producti it 11. Contribution of Inputs to Net Output

4 5 7

10 13 - 14 15 20

20 21 3

I

Introduction

General Framework of Study It is well known that agriculture dominates the Burmese economy. It contributes 35-45 per cent of GOP (in value added}, provides employment for 60-70 per cent of the labour force, and accounts for 70-90 per cent of the country's export earnings. An assessment of agricultural development in Burma reveals two major developments (Mya Than 1980). The first took place during the colonial period (1860s to 1940/ 41). From a state of subsistence economy before the annexation, Burma was transformed into the largest exporter of rice and rice products. The main driving force was the area expansion in lower Burma. However, the dynamic and educative effect was lacking because with commercialization agrarian class relations deteriorated, and the benefits of agricultural development were channelled out of the country. After independence came the period of static and stagnant agriculture, which lasted for more than a quarter of a century (from late 1948 to the first half of the 1970s). The performance of rice production was poor: there was no substantial increase in productivity or in volume. World War II, the post-independence unrest, and the lack of adequate institutional factors (such as land reform, credit system, and pricing policy) and incentives, together with the absence of any substantial change in technology, contributed to the poor agricultural production at that time. The second epoch of agricultural development occurred recently. Soon after the start of the Second Four-year Plan (Second FYP) in 1974175, there was a breakthrough in yield per acre and production of paddy. The contributing factors include favourable weather conditions, the introduction of high-yielding variety (HYV) seed programmes, along with improved techniques and farmers' positive response to the government campaign " Whole Township Special Rice Production Programme" - successfully launched by the government during the second half of the Second FYP. The introduction of the technology package consisted mainly of HYV seeds, increased utilization of chemical fertilizers, improved transplanting methods, and better weed control practices. In 1978/79, twenty-three townships took part in the campaign and in 1982/83, the number of participating townships increased to eighty-two. The situation today, however, is as Kyi (1985) states, "the growth of agriculture which had done so well

2

GROWTH PATTERN OF BURMESE AGRICULTURE

in the late seventies seems to be constrained by a general inefficiency of the economy as well as its own limitations". Thus the momentum of the second agricultural development decade seems to have reached "saturation point". The objective of this paper is to depict and analyse the "Second Agricultural Revolution", especially its growth pattern and causes. For the purpose of this study, productivity analysis is used as a measure of development since it reflects the level of economic efficiency and sheds light on trends in the output of the agricultural sector. Furthermore, classical econometric models such as correlation analysis, regression analysis, and production functions are applied to determine the preference pattern of technologies. Finally, this study attempts to develop the policy criteria which, I hope, would pull Burmese agriculture out of its present stagnant situation. Conceptual Framework of Productivity There are various concepts of productivity. The works of Kendrick (1966), Crosson (1955), and some other authors cover all aspects of productivity. Productivity in its simplest form is nothing other than the relationship between input and output. Authors classify various forms of productivity according to their own concepts. However, for our purposes, labour productivity, land productivity, total productivity index, and capital-output ratio are used the way they are defined in Yamada's (1975) work. The following definitions are used here: labour productivity

=

land productivity

total net output in agriculture total agricultural workers employed total agricultural net output total agricultural land

total productivity index

total output index

= ------total input index

total output index total input index

=

=

index of total value of agricultural net output

weighted average of the indices of labour, land, capital, and current inputs measured with factor shares as weights.

capital-output ratio

total value of fixed capital stock

= ------------total agricultural net output

INTRODU CTION

3

As Hayami and Ruttan (1971) suggest, resource endowments, technology as embodied in fi xed or working capital, and human capital (which includes educational level , knowledge, and learning capacity) are broadly conceived of as input co mponents of productivity, and productivity study will reflect trends and changes in the level of resource endowments, technology, and human capital during the study period.

Institutional Framework of Input Supply

The growth and development of agriculture depends upon various factors : natural, economic, technical, and institutional. Some of these factors are quantifiable; others are not. Even though this study is confined to analysing mainly the quantifiable inputs, it is not possible to factor out non-quantifiable inputs such as pricing policies, credit system, and land reforms because they also influence the output of the agricultural sector. The institutional factors mentioned above are discussed in this section. (Natural factors such as rainfall, temperature, soil condition, and so forth will be di sregarded as this study deals only with social and economic aspects.)

Price Policies Prior to the 1973174 budget year, the official paddy price was fL':)

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Total Product ivity

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FIGURE

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RELATIO NSHIP BETWEEN LAND-LA BOU R RATIO AND LAN D PRODUCT IVITY

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Land-Labour Ratio

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9. RELA TION SHIP BETW EEN LAND P RODU CTIVI TY AND TOTAL CURR ENT CAPIT AL PER ACRE

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