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Farm size and production efficiency in Chinese agriculture: output and profit

Farm size and production efficiency in Chinese agriculture: output and profit The purpose of this paper is to analyze the relationship between farm size and agricultural production efficiency from the aspects of output and profit in order to find an optimal farm size that achieves both output and profit efficiency in agricultural production in China.Design/methodology/approachThis study uses the 2012 China Family Panel Studies survey data and employs the stochastic frontier analysis (SFA) models to investigate empirically the relationship between farm size and agricultural production efficiency.FindingsThe study finds that there is an inverted-U curve relationship between farm size and output efficiency and a U-shaped curve relationship between farm size and profit efficiency in agricultural production in China. Based on the empirical results, the study estimates that the appropriate farm size is around 10–40 mu and the optimal farm size is around 20–40 mu both in terms of output efficiency and profit efficiency in Chinese agricultural production under the current agricultural technology and land management system.Practical implicationsThe findings of this study suggest that appropriate land consolidation will bring more benefits to farmer households and agricultural production efficiency. There are some policy implications. First, governments should give long term and more stable land using rights to farmers through extending the period of land contract and verifying land using rights. Second, governments should encourage transfers of land using rights and promote land consolidation. But the implementation of this policy should consider regional differences and not be used for blindly pursuing increasing land size. Third, land consolidation should be accompanied with the development of specialized agricultural services.Originality/valueThe paper makes two major contributions to the literature. First, the authors use the SFA model to investigate the relationship between land size and agricultural production efficiency. Second, the authors establish two SFA models – the stochastic frontier output analysis model and the stochastic frontier profit analysis model – to estimate the optimal land size to achieve both output and profit efficiency of agricultural production in China. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Agricultural Economic Review Emerald Publishing

Farm size and production efficiency in Chinese agriculture: output and profit

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References (36)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1756-137X
DOI
10.1108/caer-05-2018-0082
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to analyze the relationship between farm size and agricultural production efficiency from the aspects of output and profit in order to find an optimal farm size that achieves both output and profit efficiency in agricultural production in China.Design/methodology/approachThis study uses the 2012 China Family Panel Studies survey data and employs the stochastic frontier analysis (SFA) models to investigate empirically the relationship between farm size and agricultural production efficiency.FindingsThe study finds that there is an inverted-U curve relationship between farm size and output efficiency and a U-shaped curve relationship between farm size and profit efficiency in agricultural production in China. Based on the empirical results, the study estimates that the appropriate farm size is around 10–40 mu and the optimal farm size is around 20–40 mu both in terms of output efficiency and profit efficiency in Chinese agricultural production under the current agricultural technology and land management system.Practical implicationsThe findings of this study suggest that appropriate land consolidation will bring more benefits to farmer households and agricultural production efficiency. There are some policy implications. First, governments should give long term and more stable land using rights to farmers through extending the period of land contract and verifying land using rights. Second, governments should encourage transfers of land using rights and promote land consolidation. But the implementation of this policy should consider regional differences and not be used for blindly pursuing increasing land size. Third, land consolidation should be accompanied with the development of specialized agricultural services.Originality/valueThe paper makes two major contributions to the literature. First, the authors use the SFA model to investigate the relationship between land size and agricultural production efficiency. Second, the authors establish two SFA models – the stochastic frontier output analysis model and the stochastic frontier profit analysis model – to estimate the optimal land size to achieve both output and profit efficiency of agricultural production in China.

Journal

China Agricultural Economic Review – Emerald Publishing

Published: Jan 15, 2019

Keywords: China; Farm size; Agricultural production efficiency; Stochastic frontier analysis model; C13; Q12; D24; Q15; Q18; R14

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