The qualitative change in fertilizers consumed is most interestingly illustrated in the commercialization of green manure. Although the use of green manure as fertilizer decreased as indicated above, the production of green manure crops did not.[7] Before the share restriction, green manure crops were seldom harvested, but were plowed under for fertilization. Under the restriction, however, the direct consumption of green manure declined. Instead, part of the crops were now harvested, processed in cake form, and sold in the market as commercial vegetable fertilizers. Besides a higher processing cost and more effectiveness in use, another reason may be offered for the marketing of green manure. The harvesting of the crops released the land earlier for other crops, a condition essential for the faster crop rotation in tenant farms as implied by the hypothesis of increased farming intensity.
The aforementioned changes in fertilizer consumption conform with a report provided by the Taiwan Provincial Land Bureau which indicates that the greater part of the increase in tenant income was invested in farming.[8] It was reported that, in 1950, 39.8 percent of the increase in tenant income was spent on fertilizers, 14.2 percent on draft animals, and 12.8 percent on farm implements. Aside from housing, health, and miscellaneous expenditures, which are both consumption and investment spending, the increase in pure consumption as a percentage of the increase in tenant income included 7.3 percent in food and clothing and 2.3 percent in amusement.
[1]. See Shen, Agricultural Development on Taiwan, pp. 136-39, 187-88 and elsewhere. The usual practice was that fertilizers and seeds were provided by the tenants (housing was usually provided by the landowners). The qualitative changes in fertilizers represented increasing farming intensity and not compensating payments.
[2]. DAF, Yearbook 1952, sec. 5. C. Note that there did not exist a well-established trend toward the increasing use of commercial fertilizers before 1948. Ignoring the war years before 1947, there was a decrease in commercial fertilizer consumption of 4.5 percent from 1947 to 1948, and afterward the trend of increasing commercial fertilizer consumption is clear. We consider these qualitative changes in fertilizers consumed as evidence confirming the hypothesis of increased farming intensity, which must not be confused with further increases in commercial fertilizers after 1953, when their production was subsidized by the government. See Office of Economic Policy, "The Taiwan Fertilizer Industry," p. 3.
[3]. DAF, Yearbook 1952, sec. 5. D. In aboslute weight, which does not appear to be a relevant measure, the decrease in farm-produced fertilizers was slightly greater than the increase in commercial fertilizers.
[4]. Ibid., sec. 5. C.
[5]. Shen, Agricultural Development on Taiwan, pp. 136-39, 187-88. See also Office of Economic Policy, "The Taiwan Fertilizer Industry."
[6]. DAF, Yearbook 1952, sec. 5. D.
[7]. Ibid., sec. 3. V.
[8]. Taiwan Provincial Land Bureau, "Implementation of the 37.5 per cent Farm Rent Limitation Program," mimeographed (1950), pp. 37-38. The report was compiled from questionnaires answered by tenants, the accuracy of which is questionable. Various estimates of the average increase in tenant income are available in many sources, but all are computed simply by using an arbitrary constant as a measure of the increase in the tenant's income. They are overstatements for political propaganda purposes.
C.Conclusions
Admittedly, the data presented in this chapter are inadequate. With respect to reallocation of labor resources, information is lacking on how the farming population data were compiled. One may question whether farming population is a correct measure of actual working units. Various reports indicating that tenants worked longer hours under the share restriction are based on only a few samples. The significant reduction in tenant landholdings, however, renders stronger evidence. With respect to adjustments in fertilizer inputs, we lack information on whether the increases in fertilizer expenditures occurred primarily in tenant farms. One may conclude, however, that available evidence related to resource reallocation is consistent with the implications of the hypothesis of increased farming intensity, and I could find no evidence which is inconsistent with my hypothesis. Reinforcing evidence is available when we investigate the behavior of various crop yields in the next chapter.
But the increase in tenant input intensity under the share restriction in Taiwan has been regarded by reform officials and Taiwan economists as "significant." Several hypotheses have been advanced to explain this observation. These hypotheses have two themes in common.[1] Accepting the evidence on input adjustments as presented, we may dismiss the arguments with which Taiwan reform officials have claimed "success."
Their first line of argument rests on the assertion that tenant cultivation had been inefficient initially, and that the share restriction led to more efficient land use. Under share tenancy, they argue, the tenant's incentive to farm is reduced, since part of the output is taken away by the landowner. According to this thesis, tenant inputs committed to land had been "insufficient" under a free market, with the marginal products of tenant inputs higher than the marginal costs, so that the reduced rental percentage encouraged greater tenant inputs. Indeed, this argument implies that as long as the rental percentage is greater than zero, inputs committed in tenant farms will never be as high as in owner farms. According to my theory, however, resource use in owner farms and in tenant farms is equally efficient under unrestrained private property rights. Under the share restriction, the hypothesis of increased farming intensity implies "excessive" resources allocated to tenant farms. Which, then, is the useful hypothesis?