AccordingtoevidenceobtainedfromAsianagriculture(seechapters3and4,sectionAofthischapter,andAppendixB),wefindnonotabledifferenceininputintensitiesamongfarmswithdifferentlandtenurearrangementsunderunrestrainedprivatepropertyrights.But,asisshownincolumns7and8intable2,underthesharerestrictionin1951,farmingpopulation(admittedlyaroughmeasureoflaborinput)perunitoflandwas47percenthigherintenantfarmsthaninownerfarms.[2]Andthisdoesnotincludeincreasesinothertenantinputsasdiscerned.Thesignificantlyhigherlabor-landratiointenantfarmsthaninownerfarmsimpliesthatthemarginalproductoflandintenantfarmswashigher,andthemarginalproductoftenantlaborwaslower,thansimilarresourcesemployedelsewhere.
Theirsecondlineofargumentrestsontheso-calledabilitytoinvest.Ahighertenantineunderthesharerestriction,theyclaim,allowedthetenantagreaterabilitytoinvest,whichledtohigherinvestmentinfarmingandmoreefficientresourceuse.Ifinvestmentinfarmingyieldsreturnsataratehigherthantheinterestrate,however,incrementalinvestmentswillbemittedbyeitherthelandownerorthetenant.Forexample,ifmorecostly(effective)fertilizersledtoahigherrentalannuity,theywouldhavebeenusedwithoutrentalsharecontrol.Theclaimofinsufficientinvestmentowingtolowineofthetenantignoresthepossibilitiesofborrowingthroughthemarket,[3]andthatthelandownermayinvestinlandandraisetherentalpercentage.
Theperiod1949-51reportedlyhadthehighestinterestratesonrecordinTaiwan.[4]Theprevailinginflationdoesnotseemtoexplainfullywhytheserateswereconsiderablyhigherthanthoseoflateryears.[5]Inthesameperiod,thegreatestincreaseintenantfarmingintensitywasrecorded.Theseseeminglycontradictoryphenomena(sincetheexistingpoliticalinstabilityandhighinterestratestendtodiscourageinvestment)areconsistentwithourhypothesisofincreasedfarmingintensity.Finally,anincreaseininvestmentdoesnotnecessarilyimplymoreefficientresourceuse.Therateofinterestmeasuresthealternativerateofreturn,andefficientallocationrequirestheequalizationofmarginalreturnseverywhere.
However,"theinterestrateschargedbythesebanksareuniformlyregulatedbythegovernment,whicharemuchlowerthantheprevailingratesinlocalmoneymarkets,…ricemerchantswerenotallbenefitted…becausemostofthemcouldhardlyobtaintheneededcreditfromthebanks."
[1].Seesourcescitedinchapter1,sectionB.
[2].Thisisobtainedbydividingthereciprocalof0.155bythereciprocalof0.228andsubtractingone.Itisinterestingtonotethattosupporttheirargument,Chinesewritersemphasizedonlytheincreasedtenantinputs.Theyear1951perhapsyieldsabetterapproximationthan1949and1950,sincein1951partofthepublic-tenantlandswassoldtotenants(recallthatasmallportionofthetenantlandswasunderstateownership).Thelabor-landratiointenantfarmswouldbeslightlyhigheriftheunaffectedtenantfarmsweretransferredtocolumn7.Ontheotherhand,asmallmarginshouldbeallowedformoreintensivetenantfarming,sinceagreaterportionofpaddyfieldswereundertenancy(seetable4inchapter8).
[3].SeeIrvingFisher,TheTheoryofInterest(NewYork:MacmillanCo.,1930);andJackHirshleifer,"OntheTheoryofOptimalInvestmentDecision,"JournalofPoliticalEconomy(August,1958).
[4].SeeS.M.Yeh,RiceMarketinginTaiwan(Taipei:JCRR,1955),pp.73-74.Themercialbankrateofinterestwasabout4percentpermonth.
However,"theinterestrateschargedbythesebanksareuniformlyregulatedbythegovernment,whicharemuchlowerthanprevailingratesinlocalmoneymarkets,ricemerchantswerenotallbenefittedbecausemostofthemcouldhardlyobtaintheneededcreditfromthebanks."
[5].Aswasseenintheprecedingfootnote,themoneyrateofinterestduring1949-51wasintheneighborhoodof50percentperyear,asparedtoaround20percentafter1953.Fortworeasonsoneisledtobelievethattherealrateofinterestwasalsohigherduring1949-51.First,aftertheissuanceofanewcurrencyin1949,theriseinthepriceofricein1950-51hadbeenlessthan15percent.Thustheanticipatedrateofinflationwouldhavehadtobeconsiderablyhigherthantheactualratetoironoutthedifferencesinrealinterestratesparedwithlateryears.Second,inflationcontinuedinTaiwan,thoughatalowerrate,wellafter1953.
8.PatternsofCropChoice,HectareYieldsandMarginalProductivitiesImpliedbyIncreasedFarmingIntensity
Underthesharerestriction,recall,thehypothesisofincreasedfarmingintensitystatesthatthereexistsatendencytowardthemaximizationofgrosscropvalueperunitoflandperperiodoftime.Sincedifferentvaluesareassociatedwithdifferentcrops,andsincedifferentphysicalattributesofcropsrequiredifferentinputintensitiesfortheircultivation,certainpatternsofcropchoiceareimplied.Thatis,withtheaddedconstraintonrentalsharing,thereexistpredictablepatternchangesincropplantations.Theconformityoftheobservedbehaviorofvariouscropyieldstothepredictedpatternsofcropchoiceinturnrendersevidenceconfirmingthatintenantfarmsthemarginalproductoflandhadincreased-andthemarginalproductsoftenantinputshaddecreased—underthesharerestriction.
Inthischapter,therefore,Ishalltrytodotwothings.OneistodetectpatternsofcropchoiceinTaiwanunderthesharerestriction.Anotheristorelatetheassociatedchangesintheobservableaveragecropacreyieldstotheimpliedchangesinmarginalproductsoffarminginputs.[1]
A.TheMeasurement
LetmebeginbyclarifyingthemeaningofsometermswhichIshallemploy.
CultivatedLandandCropArea