GOVERNMENT POLICIES AND AGRICULTURAL SUPPLY RESPONSE: PADDY IN SRI LANKA

P. J. Gunawardana and Eddie Oczkowski

Journal of Agricultural Economics, 1992, vol. 43, issue 2, 231-242

Abstract: An aggregate analysis of supply response in the paddy (rice) sector of Sri Lanka during 1952‐87 is conducted to identify the impact of pricing policy, irrigation programmes, institutional credit and concessional sales on area, yield and overall supply. The focus of the estimation procedure is the selection of an appropriate functional form for regressions and on the price variable that best represents the price to which producers respond in making area and yield decisions. In the case of both area and yield, the econometric criteria favour the acceptance of log‐linear equations with the ratio of the guaranteed price of paddy to fertiliser price. On the basis of overall supply elasticity estimates, it is concluded that while pricing policy, irrigation programmes and institutional credit provide incentives to the expansion of paddy production, concessional sales of rice act as a disincentive.

Date: 1992
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