MSU Agricultural, Food, and Resource Economics
Despite economic reforms towards a more liberalized market, rice land and labor productivity remain low in Madagascar Highland. The purpose of this paper is to address the importance of the effects of land quality and natural shocks on land and labor productivity, and to explore the implication for agricultural policy actions.
Using data from 563 rice plots, the study finds that: Â Â (a) land quality and natural shocks do influence rice production in Madagascar and their omission in modeling efforts leads to a bias of the marginal effects of land, labor, and other factors; Â Â (b) return to land and labor varies across smallholder farms of different size. Â Smallholder farms of all size have low family labor productivity, and only medium and larger smallholder farms find interesting profit in using hired labor; and Â (c) improvement in Rice Seedling Transplantation seems to be a way to overcome bad land quality and to reduce production vulnerability from exogenous natural shocks. Â However, its negative effect on the return to labor seems to explain farmer's reluctance to adopt this technique.
Major implications to draw from this study are the necessity to include land quality and exogenous natural shocks in agricultural production analysis in developing countries. Also, one should look at the way to improve the return to labor as land productivity increases, for example, the use of mechanical small tools or the use of animal traction or a better allocation of family labor in order to increase its return.