Resource Allocation and Factor Substitution in Guayas Basin Rice Production

The primary objective of this study was to examine changes in resource productivity and factor shares as irrigation was introduced on small rice farms using traditional management techniques. Average output on irrigated farms was double that of dry farms. This was because irrigated farms produced two crops as opposed to one crop on farms without irrigation. Examination of marginal products showed that farmers with irrigation could profitably use more land. Dry farmers could profitably use more labor. The low labor input and high MP of labor on dry farms occurs because these 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. This information provides criteria for formation of rice production policy in Ecuador