Economies of scale in China’s crop production: implications for farm restructuring

07 August 2018

The issue of scale inefficiency has consistently been the focus of government policy makings and academic research in China. This paper estimates scale economies in China's crop production and investigates the factors that influence it. These factors include farm size, input prices, the innovation of technology, and the reconstruction of farming organization and institution. For the empirical study, we specify a translog multiproduct cost function (TMCF) to estimate internal economies of scale at the farm level based on a national representative household data from 2004 to 2011 collected by the Fixed Point Rural Survey (FPRS), Ministry of Agriculture of China (MOA). The results point to significant scale economies at the median of the sample in the whole period and scale economies changing over the time and across regions. The findings highlight the important policy implications of increasing farm scale flexibility and developing capital service market and relevant public infrastructure.

Researche: Yanjie Zhang, Thomas Glauben Cooperation

Partners: Nanjing Agricultural University