Bias towards the Large farm subsector in agricultural research: the case of Malaysian Rubber

Abstract

The economic effects of historical research bias towards the estate subsector of the Malaysian rubber industry are examined. This bias may be expected to have induced technologies using factors appropriate to the relative input prices and other characteristics of estates. It may thus have benefitted them more than the other major subsector of smallholdings, which has had higher prices of capital. The consequences of bias are first investigated by comp􀀂ring the resource use, yields, and profitability of sampled units of the two subsectors on successive technological strata, from the early 20s to the mid 70s. In both subsectors the adoption of successive new technologies has permitted considerable savings in the land, labour, capital, and management required to achieve a given output. While these technologies have been land and labour-saving and capital-using, they have also permitted substantial factor substitution, and smallholdings have all along employed more labour and less capital than estates. The analysis denotes that up to the early 60's estates benefitted more than smallholdings in applying new technologies, but that subsequently there has been little difference. The bias is also scrutinized by examining major features of modern rubber technology of the 80s. This indicates a wide possible substitution between labour and capital at current output levels, but shows too that the move to higher output is strongly capital-using,with less possibility of factor substitution. The new techniques of the 80s are further highly anagement-using compared to previous strata.Factor prices to estates and smallholdings now seem likely to converge in the increasingly commercialized Malaysian economy, and in these circumstances the earlier bias will no longer be a problem. The main current policy indication is to ease the adjustment of smallholdings to the emerging technology. Thus in working along the innovation possibility curve, researchers should provide somewhat more for substitution between labour and capital. At the field level extension services should be improved, so that small farmers can better handle the greater management requirements of new techniques.