TY - JOUR
T1 - Farmers’ long-term investment decisions
T2 - a study of Sri Lankan rubber smallholders
AU - Jayasuriya, S.
AU - Barlow, C.
AU - Shand, R. T.
PY - 1981/10/1
Y1 - 1981/10/1
N2 - Planting and replanting of perennial crops confronts small farmers with a long-term investment decision. In this study, we analyse the behaviour of rubber smallholders in Sri Lanka when faced with a replacement decision. An intertemporal profit maximizing model (maximizing discounted stream of expected future net revenues) predicts behaviour of larger, hired labour using farmers quite well. The model can also be extended successfully to smaller, family farms, when a lower than market wage rate is imputed to family labour to better reflect opportunity cost of labour, and risk considerations are incorporated in relatively simple fashion. The difference between a cash investment and a labour investment is crucial for the poorer family farmers and an appropriate cash subsidy can play a vital role in inducing them to undertake long term investments.
AB - Planting and replanting of perennial crops confronts small farmers with a long-term investment decision. In this study, we analyse the behaviour of rubber smallholders in Sri Lanka when faced with a replacement decision. An intertemporal profit maximizing model (maximizing discounted stream of expected future net revenues) predicts behaviour of larger, hired labour using farmers quite well. The model can also be extended successfully to smaller, family farms, when a lower than market wage rate is imputed to family labour to better reflect opportunity cost of labour, and risk considerations are incorporated in relatively simple fashion. The difference between a cash investment and a labour investment is crucial for the poorer family farmers and an appropriate cash subsidy can play a vital role in inducing them to undertake long term investments.
UR - http://www.scopus.com/inward/record.url?scp=84925973472&partnerID=8YFLogxK
U2 - 10.1080/00220388108421816
DO - 10.1080/00220388108421816
M3 - Article
AN - SCOPUS:84925973472
VL - 18
SP - 47
EP - 67
JO - Journal of Development Studies
JF - Journal of Development Studies
SN - 0022-0388
IS - 1
ER -