Determinants of Agricultural Productivity: The Role of Land, Labor, Capital, and Technology

Abstract

The study looked at the effect of factors such as land, labour, capital and technology on the productivity of the agricultural production system at farm level. The Farm level socioeconomic survey was conducted through multistage sampling technique among the farming household by adopting random sampling and primary data collection was carried out with a structured questionnaire comprising of farm size, utilization of labour, investment into farms, machine/ technology adoption, irrigation, fertilizer usage, seed usage, production quantity and farm income. Crop output per cultivated land was measured as agricultural productivity and the land holding size, labour input, investment of capital, availability of agricultural machinery, improved seed use and irrigation were used as explanatory variables and technology use was also included. Descriptive statistics were applied to describe the sampled farms while ordinary least squares (OLS) production-function model was estimated to measure the role of the major production factors in the productivity of the sampled farms. Multicollinearity diagnostics and heteroscedasticity diagnostics were used to determine whether the model met the classical linear regression assumptions, and the results showed that the model and the assumptions were met. The findings showed that among the farm factors, farm size, labour use, capital investment, fertilizer use, access to irrigation and improved seed adoption were all positive and significant in improving agricultural productivity with capital investment showing the greatest effect and labour the least. The study shows that productivity gains are possible through the combined and synergistic effect of these four factors and not just one, and suggests greater access to credit, irrigation infrastructure and technology adoption support for smallholder farmers.