Incentives and Constraints in the Transformation of Punjab Agriculture

The introduction of modern crops varieties in the mid-1960s caused a dramatic change, known as the “green revolution”, in agricultural production in Asia, as elsewhere. However, in spite of their yields, the process of adoption of these varieties has taken a long time, and even today traditional varieties are still widely grown. Various reasons, such as imperfect information, uncertainty, inadequate human capital, and institutional constraints, have been given for this slow diffusion. This research during 1960-79 emphasizes the role of economic incentives and resource availability in determining the pace of technology adoption. Only three years after their introduction, the modern wheat varieties accounted for 70 percent of the wheat area in Punjab. Thereafter, their spread wad more gradual. From this pattern, the authors conclude that the main determinant of the pace of adoption could not have been uncertainty or lack of information. The modern varieties perform best under irrigation and heavy doses of fertilizer, and therefore their expansion of these inputs required mobilization of resources from other activities. The improvement in yield increased the rate of returns to investment in irrigation and fertilizer production and thus generated a gradual expansion in their supply. Since total resources are scarce, such a shift is time-consuming. This explanation illustrates what the authors see as a general and important aspect of the implementation of new technology. When the resource requirements of the new technology are different from those of the existing technology, the pace of the implementation will be determined by the speed at which the resources can be shifted to the new technology. This speed depends on the difference in productivity between the new and existing techniques and on prices and overall resource availability. This identification of the process has far- reaching implications for policies directed toward agricultural growth. This study is part of IFPRI’s continuing research efforts in analyzing the nature and economic consequences of technological change and follows earlier work on the green revolution.