Land tenure security and farm efficiency in Indian agriculture: Revisiting an old debate

This paper examines the Marshallian inefficiency hypothesis of share tenancy system in agriculture of Odisha, Eastern India. It examines the hypothesis from a different perspective where it is argued that a secured land tenure system enhances farm efficiency even though it is sharecropping. We develop three hypotheses within the profit maximization framework and use the efficiency scores of paddy growers computed from the data envelop analysis (DEA) to verify them empirically. The ‘latent variable regression model’ results reveal that a secured land ownership status significantly augments farm efficiency. But the nature of tenancy contract (sharecropping and fixed-rent tenancy) makes no difference in farm efficiency. The policy implication of the study calls for tenancy reform in Odisha agriculture to make the tenancy a more secure one. Currently, the government of Odisha has banned the share tenancy. But a vast concealed tenancy comprising of marginal farmers and landless cultivators is in place. So any reform in this regard would benefit them directly.