Farm Size And Productivity In Grain Sector

A substantial body of literature,beginning with Sen(1962),has provided evidence for the existence of an inverse relationship between farm size and land productivity in developing countries.Compared to related studies carried out in some developing countries,fewer studies have addressed the farm size-productivity relationship for China,and those that do use relatively outdated data sets that cannot represent the present situation of frequent transfer of agricultural labor force,rapid development of land transfer market and obvious change of input factor structure in China.With that in mind,we use statistical analysis,non-parametric estimation,stochastic production frontiers and other methods,along with a large panel dataset of farm households in China during 2010-2011,to assess whether relatively larger grain producing farms in China exhibit higher productivity.More specially,the objective of this study is to identify the relationship between land size and land productivity,technical efficiency,and total factor productivity in the grain sector in China,and to explore the causes and associated mechanism in forming the inverse productivity relationship by examining the relationship between farm size and factor inputs.Understanding whether small farms or large farms are more productive,not only enriches the content of empirical analysis on the relationship between farm size and productivity in China,but also has practical significance for the current large-scale promotion and the economic linking between small farms and modern agricultural development.The main conclusions of this study are as follows:First,more people and less land are the basic characteristic of China's agriculture,which determines the rationality of small-scale farms in China.The farms with highly mechanized agriculture in United States can reach thousand acres,but only if there are more land and less people,which is impossible for China,China's agriculture cannot follow the development path of the United States model through simple market mechanism and government regulation.The best agricultural modernization in line with China's national conditions is the "small and refined" modernization model demonstrated by Japan,which proves the rationality of the existence of small-scale farms in China.Second,population pressure is one of basic conditions in China,which determines the long-term existence of small-scale farms in China.This study summarizes the historical vicissitude process of small farms in China.We emphatically analyze the development situation of small farms from the collective economic period to the present using various macroscopic data.And we find that the population pressure is obviously one of the most basic national conditions in China,and it is also the fundamental reason leading to small-scale operation for China's farms.Although the problem of overcrowding in China's agricultural population is gradually improving,the "super" small-scale land operation will still be the main organizational form in quite a long period in China.Third,there is a significant inverse relationship between land productivity and farm size.The key finding of this study is that,more matter for the whole grain sector or wheat,rice,maize and soybean,land productivity always show a decreasing trend as farm size goes up.In terms of the coefficients among different varieties for grain,the inverse relationship is the strongest for rice and the weakest for maize.In addition,no matter for wheat,rice,maize or soybean,the inverse relationship between land productivity and farm size in Jiangxi,Hubei,Hunan and Sichuan is most serious.Fourth,small farmers enjoy the advantage of technical efficiency(TE)and total factor productivity(TFP)relative to large farms.Specifically,the results show that there is an IR between TE and farm size both for the whole nation and 13 main grain producing provinces.Except for soybean,the IR is significant for wheat,rice,and strongest for rice.As for TFP,small farms still show significant advantages,both in the whole nation and primary producing areas.With the help of existing research literature,this study also discusses the farm size-productivity relationship spanning from high-to low-income countries.The results suggest that the relationship between farm size and productivity evolves with the stage of economic development.Initial,the productivity advantages of small farms appear to attenuate gradually over time,moving toward constant and eventually increasing returns to size.Fifth,the labor input per mu for small farms is significantly higher than large farms.There is also an IR between non-labor input per mu and farm size.Specifically,the differentials in non-labor inputs across farm sizes are found to be mainly attributable to differences in the cost of seed,fertilizer,pesticide,animal power,and water and electricity;whereas there is no significant difference in the cost of mechanical service.Since application of biochemical inputs such as fertilizer and pesticide as well as land watering activities are usually labor-intensive,it is conjectured that smaller farms rely on a relatively large amount of biochemical and labor inputs to bring about higher land productivity as compared to larger farms.Besides,we also find that small farms exercise higher efforts as compared to larger farms,resulting in the inverse relationship between land productivity and farm size.Moreover,the results suggest that smaller farms seem to pay more attention to gross output and cash input whereas they basically do not care about their own labor input,whereby obtaining high per-mu value-added margins as compared to larger farms.Therefore,the higher yields on smaller farms are a result of the utilization of a relatively higher level of labor and non-labor inputs along with skilled-oriented precision farming technology(i.e.,Chinese phrase Jinggeng Xizuo),while the inverse productivity relationship is explained by the behavior of small-size producers with employment constraints,leading to smaller farms generating a higher yield than larger farms.This study is not to oppose large scale,but emphasize that urbanization and land scale management is a process of development.The relationship between farm size and productivity evolves with the stage of economic development.Initial,the productivity advantages of small farms appear to attenuate gradually over time,moving toward constant and eventually increasing returns to size with the development of society.At present,China is in a period of agricultural transformation.With a large number of rural labor forces moving out of rural places,the agricultural labor force is showing an aging and feminization trend.However,as for the whole nation,there is still a certaina mount of labor force that is invisibly unemployed in rural places,and the income from agricultural operations is still an important source of income for most rural residents.Thus,in the period when labor is relatively abundant while land is relatively of scarce,agricultural development strategy should be focused on promoting the common development of larger and smaller farms rather than favoring large-scale farms,while ignoring small-size farms.