Technology,Cost Reduction,and Returns in Agriculture: A Study of Wheat and Rice in Punjab

Abstract

This study examines the impact of new technology on costs and returns in agriculture, taking the leading cases of wheat and rice in Punjab. Apart from boosting production, has the new technology achieved the fundamental objectives of reducing per unit costs and raising returns? The study finds that reduction in real per unit cost of production has indeed been achieved for both wheat and rice. However, real returns in wheat have been stagnant, since yield increases are offset by declining real domestic prices. Real returns in rice have, however, risen substantially. Curiously, the upward pressures on costs have come not from new technology inputs but from conventional inputs such as labour and draught power.