Resource allocation and factor substitution in Guayas basin rice production

THE AVERAGE OUTPUT ON IRRIGATED FARMS WAS DOUBLE THAT OF DRY FARMS, BECAUSE IRRIGATED FARMS PRODUCED TWO CROPS. EXAMINATION OF THE MARGINAL PRODUCTS SHOWED THAT FARMERS USING IRRIGATION COULD PROFITABLY USE MORE LAND. THE LOW LABOR INPUT AND HIGH MARGINAL PRODUCT OF LABOR ON DRY FARMS OCCURS BECAUSE THE FARMERS ARE UNDERCAPITALIZED AND ARE OBLIGED TO ACCEPT OFF-FARM EMPLOYMENT AT CRUCIAL PERIODS OF THE RICE-GROWING SEASON. ON BOTH FARM TYPES, IRRIGATED AND DRY, FACTOR SHARES OF LAND WERE HIGH, SUGGESTING THAT A REDISTRIBUTION OF LAND WOULD ALSO REDISTRIBUTE INCOME. IRRIGATION DOES INCREASE OUTPUT AND PROVIDES INCOME AND EMPLOYMENT DURING SLACK PERIODS. SUPPLEMENTAL IRRIGATION BY PUMPS APPEARS TO BE LESS DESIRABLE THAN MORE PERMANENT TYPES OF IRRIGATION SYSTEMS.