Analysis Of The Impact Of Cropping Pattern Change And Technical Progress On China’s Grain Production

Food security is among the top priorities for the Chinese government.Accordingly,self-sufficiency ratio(SSR)for grain has been treated as the basic indicator of food security in China for a long time.It has been reasonable given certain specific historical circumstances,to equate food security to high SSR and high output of grain.However,this viewpoint has now faced some unexpected problems currently topical in regards to China’s food security.These are a simultaneous increase in grain output,imports and inventory,referred to as the“triple-high”,and a constant decline in SSR for grain in spite of the domestic grain output stimulation.These issues pose certain requirements for Chinese food security policy under the open market conditions.Specifically,the food security policy of China should not only seek for promotion of grain production,but,more importantly,for reduction in the cost of food production,and for improvements in the international competitiveness of China’s grain products.Considering grain output growth,many previous studies believed that relying on agricultural technical progress to increase grain yield has been and will remain to be the primary driver of grain output in China.However,technical progress should not be treated as the only driving force for increase in grain yields as dynamics in factor inputs,cropping pattern change and many other factors can also have positive impact.Indeed,the role of cropping pattern change has often been neglected.In fact,the change in the cropping pattern characterized by an increase in the share of high-yield grain crops and a reduction in low-yield ones could also induce the growth in the aggregate grain yield as well as in the total grain output.Such kind of cropping pattern change has been observed along with consecutive grain output growth in China during the past decade.However,adjustment in cropping pattern might not be related to the grain output growth stimulated by agricultural technical progress.Therefore,the contribution of agricultural technical progress to the growth of grain output in China might be overestimated if the effects of the cropping pattern change are not taken into consideration.Thus,it is important to re-visit the impacts of technical progress and cropping pattern changes on grain production in recent years.On the other hand,as regards reducing the cost of grain production and improving international competitiveness of grain products,some interesting questions arise.Even if cropping pattern change and agricultural technical progress could have positive impact on grain output,can they also play an important role in reducing the cost of grain production and improving international competitiveness in grain markets for China?Furthermore,facing with the great pressure for agricultural production cost increase imposed by increasing labor price and land rentals,how and to what extent the cropping pattern change and agricultural technical progress in the future can treat reducing the cost of grain production and improving international competitiveness of grains as a development direction?Such questions reward to be analyzed and tackled.Following the economic logics,this thesis first attempts to look into the correlation and inconsistencies between the output and competitiveness goals underpinning food security policy.We then take cropping pattern change ② and technical progress into consideration to further investigate their impact on grain output and grain production cost,respectively,in order to find out the true impacts of driving forces behind grain output growth in China during the past decade,and to test the inconsistency of the output and competitiveness goals empirically.We hope our analysis could help shedding light on adjusting the safeguard goals of food security in China as well as targeted policy implications.Specifically,the main contents and conclusions of this paper are summarized as follows:Part 1:Exploring the inconsistency between the output goal and competitiveness goal of food security.The theoretical analysis implies that,in the open market,grain import volumes are determined by the market prices.Under the presence of price-driven imports,higher imports do not necessarily imply larger gaps between domestic demand and production;in turn,higher domestic production does not necessarily lead to higher SSR.Moreover,as marginal production cost increases,further increase in grain output might be coupled with a higher average production cost,thus leading to a decline in competitiveness based on production cost.These findings indicate the goals of increasing output and improving competitiveness are not always completely consistent and may even be contradictory.Part 2:Estimating the impact and contribution of cropping pattern change on the grain output growth in China.By employing the Index Decomposition Analysis(IDA)method,we find that the cropping pattern change characterized by higher yield grain crops,i.e.maize and rice,replacing lower-yield ones,i.e.soybean,wheat and other crops,has contributed to some 17%of the grain output growth in China during 2003-2014.Therefore,besides the effects of area sown and pure yield changes,cropping pattern adjustment has also become an important driving force for the increase in China’s grain production.Part 3:Estimating the impact and contribution of technical progress on the grain output growth in China.By using the Stochastic Frontier Analysis(SFA),and taking factor input variation and cropping pattern change into consideration,we find that China’s grain output growth is still highly dependent on the increase in factor inputs during the past decade,whereas the contribution of technical progress to food production still needs to be further improved.In addition,the analysis of the influencing factors on the technical efficiency of grain production in China shows that the increase of the proportion of high yield rice and maize to some extent has played an important role in improving the technical efficiency of grain production.Part 4:Analyzing the impact of cropping pattern change on the production cost and international competitiveness of grain products in China.Comparing the costs and returns of separate grain crops in China show that,from a micro-level perspective,the cropping pattern change is actually profit driven.Therefore,replacement of low-yield crops,i.e.wheat and soybeans,high-yield ones,i.e.mazie,not only corresponds to the national interest of higher total grain output,but also allows for profit maximization at the household level.However,such cropping pattern adjustment induces the prevalence of crops with relatively faster growth in production cost per weight unit,thus leading to an increase in the total production cost of China’s grain production.Further international comparison between China and the USA also shows that the ongoing cropping pattern adjustment in China is actually directed towards the less competitive products,i.e.maize.Thus,though the cropping pattern change positively affected the grain output in China during 2003-2014,its impacts seem to be inconclusive with respect to improvements in the international competitiveness of China’s grain products.Part 5:Analyzing the impact of technical progress on the production cost of grain products in China.By employing the Bias-corrected Malmquist Productivity Index and the Data Envelopment Analysis(DEA)method,the technical change direction and the input-bias technical change(IBTC)for China’s major grain crops production are identified.The results indicate that facing an increasing labor price,labor-saving technical progress is observed for all China’s major grain crops,which is consistent with the Induced Innovation Hypothesis proposed by Hayami and Ruttan(1970,1971).Meanwhile,the substitution of relatively cheaper factors such as machinery for labor,to some extent,also alleviates the rise in the total production cost of grain in the presence of an increasing labor price.Based upon the above findings,several policy implications have been drawn in the thesis to ensure food security in China in the future:First,the traditional concept of food security should be revised,by shifting the safeguard goal from pursuing higher grain output and SSR to reducing production cost and improving the international competitiveness of China’s grain products.Secondly,technical progress should be promoted in order to save labor and create competitive agriculture.Thirdly,as the structural adjustments will not remain an important contributor to growth in grain output in China,technological progress aimed at improving the specific grain yields will become more important,especially that focusing on improving the yield of low-yield grain crops.