Determinants of Farm Revenue in Pakistan

Gustavo Anriquez, Alberto Valdes


Will small farm viability decline with the reduction of
average farm size in Pakistan? This paper addresses the determinants of
rural household and farm-related income. Using the 2001 PIDE Household
Survey, the approach developed captures the potential interactions
between farm returns and household, farm, and factor market
characteristics (schooling, family size, land tenure and operational
size, access to water, credit, and capital). Econometric results show:
(a) returns to additional schooling and the revenue elasticity of
operated acres increase with farm size; (b) medium and large farm
renters would be willing to pay more than observed rents, implying an
incentive to increase farm size at the prevailing rental values; (c)
owneroperated farms, landowners who also leases in, and fixed rental
tenants earn higher revenues than sharecropping tenants. The difference,
however, between landowner/fix-renter income and sharecropper income
varies with family and farm size, as well as water use. While these
results favour farm size increase, the results also show that off-farm
and non-farm income sources are relatively more important for small
farmers, contributing to their viability. JEL classification: D13, Q12,
Q15 Keywords: Pakistan, Land Markets, Rural Factor Markets, Revenue

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