ABSTRACT
These are some of the lessons that can be usefully drawn from the experience of the recent past. Between 1977/78 and 1982/83, the bulk of the state investment went to the state farm sector, but the return to investment in terms of increased output was dismally low. While the sector expanded rapidly in terms of cultivated area, yield rates of crops declined very sharply. Most state farms today make financial losses so that they are incapable of expanding on the basis of their own resources. While this may partly be due to inappropriate structure of administered prices, there are reasons to believe that the state farms are inefficient users of resources.32 First, seed rates are high and yieldresponses to fertilisers are low so that current unit costs of production are unusually high. Second, the utilisation rate of machinery is extremely low. This reflects itself in the unduly high value of depreciation. This state of affairs results partly from the fact that in single crop agriculture, heavy farm machinery (for example, tractors or combines) cannot but be underutilised and partly from bad maintenance, lack of adequate repair facilities and irregular availability of spare parts. Third, while the bulk of the productive work is done by temporary workers, hired at a daily wage equivalent to the minimum wage set by the government, the state farms maintain an elite work force on a permanent basis. These workers are skilled or semi-skilled, are drawn from urban areas and are paid relatively high wages. They are also entitled to welfare services which are unavailable to the rest of the rural population. Unit costs of labour supplied by the permanent workers are in fact generally above the average labour productivity.
