Impact of land tenure arrangements, Bt cotton adoption and market participation on welfare of farm households in rural Pakistan
Pakistan is the fourth largest cotton producing country. Cotton and cotton products contribute about 3.2% to GDP and 60-65 % to foreign exchange earnings of the country. In this dissertation three important aspects of cotton production and marketing are focused, i.e. adoption and impact of Bt cotton, land rights’ influence on farmers’ decision to invest in land improvement measures and efficiency level, and cotton farmers’ market participation. Cross sectional data was collected from 325 cotton farmers in Pakistan during 2007. The Propensity score matching approach was employed to estimate the adoption and impact of Bt cotton technology. The empirical results indicate that Bt cotton adopter farmers were getting 50-60 kgs per acre higher yields, household income was higher in the range of Rupees 16500-17000, while the demand for pesticide was less in the range of 0.62-0.68 liters. The probability of adopters being poor was found to be lower by 13-14%. The land rights results indicate that owner cultivated lands exhibit the higher levels of technical, allocative and economic efficiency compared to fixed-renters and sharecroppers. The net returns are positive and significant for the farmers selling at market compared to farmers selling at farm gate. From the empirical results it can be concluded that targeting the small scale farmers with Bt cotton technology can help them a way out of poverty, as well as land reforms in favour of tenants and small scale farmers can help them increase their efficiency level. Similarly, regarding farmers’ market participation, small-scale farmers can be linked to the markets by investing in human capital, improving the village infrastructure and readdressing the formal credit programme.