The Impact Of Farm Households’ Concurrent Business On Rice Production

In the past few years, while the scale of rural off-farm employment is continuously enlarging, the income structure of China’s farm households has gone through significant changes that incomes from off-farm businesses are gradually becoming the major income source of large amount of farm households. Nevertheless, the large-scale rural migration towards non-agricultural industry fails to promote the process of agricultural specialization. Instead, characteristics of the off-farm employment of households’ members, the internal work division among family members and the concurrent business of farm households have been more prominent. Under the background of normalized concurrent business of farm households, what impacts will the concurrent business have on China’s agricultural production, especially on crop production? What is the internal mechanism of these impacts? How to respond to these impacts? These issues have been focuses for the discussion and debate of academia without an accordant answer reached.This research probes the impact mechanism and influential effects of farm households’ concurrent business on their rice production, based on a set of field research data from seven counties(municipals or districts) of Hubei province. Most existing researches simply summarize impacts of farm households’ concurrent business on crop production from two sides: positive and negative, regarding the process of influences as the “black box”. In this research, however, along with the examination of the whole rice planting process, the impact mechanism of changed resource endowments, which is caused by the concurrent business, on crop production is investigated from various perspectives. Also, previous researches are confined to different impacts of the concurrent business on factor inputs of crop production or on crop outputs, while this paper starts with the sustainability and stability of crop production and examines impacts of farm households’ concurrent business on their protective production inputs, technical efficiency of rice production and rice producing risks. In this way, influential effects of farm households’ concurrent business on rice production are discussed from three dimensions: ‘quantity’, ‘sustainability’ and ‘stability’.Specifically, this dissertation includes 9 chapters: the first chapter is the introduction; the second is about theoretic foundation and literature review, providing a theoretical support of the whole research; chapter 3 and 4 describe macro backgrounds, data sources and sample characteristics, presenting features of the concurrent business and rice production of China’s farm households; chapter 5 and 6, as the first-phase empirical study probing impacts of farm households’ concurrent business on their rice production(on their rice planting decision-making), seek after the effects of farm households’ concurrent business on their production factor inputs and protective inputs, thus depicting the impact mechanism of farm households’ concurrent business on rice production; chapter 7 and 8, as the second-phase empirical studies examining impacts of farm households’ concurrent business on their rice production(on results of implementing their rice planting decision-making), look out the effects of farm households’ concurrent business on their rice outputs, technical efficiency and production risks, thus obtaining the influential effects of farm households’ concurrent business on rice production; chapter 9 draws basic conclusions of this research and provides corresponding policy implications.The following are major conclusions of this research.Firstly from the perspective of production factor inputs, the concurrent business increases the probability of farm households’ outward land transfer and significantly helps farm households to take a ‘substituting capital for labor’ production strategy. However, only the factor inputs of high substitutability for labor(i.e. agricultural machinery input) are increased while the capital input on agricultural production materials is decreased in farm households with concurrent businesses. Moreover, the effect of concurrent business on production strategy adjustment is significantly subject to the state of farming labor force and condition of agricultural infrastructure.From the perspective of protective production input, the concurrent business goes against sustainable rice production. The higher degree of concurrent business is, the lower probability of farm households’ protective production input will be, which is mainly caused by the loss effect of labor force. Although the positive income effect of concurrent business contributes to farm households’ capital biased protective inputs to some extent, there still exists a reversed ‘U’ relationship between concurrent business and capital biased protective inputs. Furthermore, the aging of farming labor force and poor agricultural infrastructure will pose a marked negative effect of concurrent business on farm households’ protective inputs of rice production.From the perspective of factor input returns, there exists a distinct difference of factor input returns among pure, Type I and Type II farm households, as they have different capital and labor constraints, but the factor input returns is significantly improved by increased investments on agricultural infrastructure. Another finding is that pure and Type I farm households have an increasing returns to scale, while Type II farm households obtain a decreasing returns to scale.From ‘quantity’ dimension, a reversed ‘U’ relationship exists between the concurrent business and rice outputs. To some extent, the concurrent business contributes to the rice outputs, whereas the output level of rice production will be reduced notably with the deepening of concurrent business degrees. Additionally, the poor agricultural infrastructure will aggravate the negative effects of concurrent business.From ‘sustainability’ dimension, there is also a reversed ‘U’ relationship presented between the concurrent business and the technical efficiency of rice production. While the concurrent business improves the farming management level of rice production to a certain extent, a deeper degree of concurrent business will lead to more extensive production management. Furthermore, an enormous space for rice output increase is found in technical efficiency amelioration.From ‘stability’ dimension, the stability of rice production is negatively influenced by the concurrent business because of unpredictable natural risks and refined labor forces. With the deepening of concurrent business degree, a larger fluctuation of farm households’ rice outputs will appear, which implies a higher production risk level.Generally, by affecting farm households’ strategies for production factor inputs, the concurrent business has posed a certain degree of adverse effects on rice production. However, excessive concerns are unnecessary since positive effects are also presented. On one hand, the loss effect and ‘slack’ effect of labor force significantly reduce farm households’ labor input on production management, their agricultural capital input and protective production input. This generates adverse effects of concurrent business on sustainable rice production, resulting in decreasing rice outputs, increasing technical efficiency loss and more drastic production fluctuation. On the other hand, the above-mentioned adverse effects can be buffered by the income effect of concurrent business, whereas the substitution elasticity of capital for labor is constrained by external conditions. Hence, the kernel problem is not about how to prevent the deepening of concurrent business, but on how to adapt to it, a normalized way of farm households’ production and management, how to meet new requirements that concurrent business has put forward on agricultural production and management, and how to provide farmers with better infrastructures and social services of agricultural production.