Abstract

The production function approach to farm management problems is undoubtedly a significant step in the direction of greater application of economic theory and statistical methods, to the problems of individual farms and groups of farms, and therefore can be considered a refinement over the traditional methods. A survey of literature, however, reveals the inadequacy of work on production functions, both in India and elsewhere. This may be due to the fact that the origin and development of this approach is more recent, or because of some of the important limitations involved in such studies, particularly those concerning farm surveys. Within the approach again, there seems to be the belief that while biological or physical production functions derived from experimental data produce more useful information on problems like fertiliser application, feed intake and milk output, feed and pork production, etc., work on farm functions appears to be as yet limited in scope. This is perhaps due to the difference in approach of the two methods, the most important of which is the fact that, while the experimentor has control over the major factor imputs in the physical functions enabling him to manipulate the quantities and types, no such thing is possible in the case of farm functions where the investigator deals, ex-post, with data produced by individual decisions of a large number of managers. The obvious result of this is the limited range to which observations can be confined in the farm functions, than would be economically allowable. To this has to be added the next important problems of the choice of a suitable form of function, which appears to be difficult at first, but is not quite so because of the limited number of the more generally accepted types of functions. This difficulty applies both to the biological function as well as farm functions. The merits and demerits of these functions are described, though briefly, by McCarthy (1959) and others in their various publications. Be that as it may, my immediate interest is the Cobb-Douglas type of production which has been used most frequently to express input-output relationships of firms, and which is the one used by me in my study of the sugarcane farms of Queensland, Australia.

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