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Does household engagement in concurrent business affect the farm size-technical efficiency relationship in grain production?

Author

Listed:
  • Min Zhong
  • Yuchun Zhu
  • Qihui Chen
  • Tianjun Liu
  • Qihua Cai

Abstract

Purpose - The purpose of this paper is to examine how households’ engagement in concurrent business (CB), which is measured by the contribution of off-farm income to household income, affects the farm size–technical efficiency (TE) relationship in Northern China. Design/methodology/approach - This paper applies a stochastic frontier analysis method to analyze data on 1,006 rural households collected from four major wheat-producing provinces in Northern China, adopting a translog specification for the underlying production function. Findings - The analysis yields three findings. First, the farm size–TE relationship is inverted U-shaped for all CB engagement levels higher than 5 percent, and the most technically efficient farm size increases with the level of household CB engagement. Second, how TE varies with the level of CB engagement depends on farm size: an inverted-U relationship for relatively small farms ( 20μ). Finally, the overall TE score, 0.88, suggests that wheat output can be increased by 12 percent in Northern China if technical inefficiency were eliminated. Originality/value - Unlike most previous studies that examine the impacts of farm size and households’ off-farm business involvement separately, this paper examines how these two factors interact with each other.

Suggested Citation

  • Min Zhong & Yuchun Zhu & Qihui Chen & Tianjun Liu & Qihua Cai, 2018. "Does household engagement in concurrent business affect the farm size-technical efficiency relationship in grain production?," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 11(1), pages 125-142, July.
    • Handle: RePEc:eme:caerpp:caer-11-2016-0179
    DOI: 10.1108/CAER-11-2016-0179
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    Citations

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    Cited by:

    1. Ngango, Jules & Seungjee, Hong, 2021. "Examining the Relationship between Farm Size and Technical Efficiency in Rwandan Maize Production," 2021 Conference, August 17-31, 2021, Virtual 314937, International Association of Agricultural Economists.
    2. Zhu, Xiaoke & Hu, Ruifa & Zhang, Chao & Shi, Guanming, 2021. "Does Internet use improve technical efficiency? Evidence from apple production in China," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    3. Ngango, Jules & Hong, Seungjee, 2021. "Impacts of land tenure security on yield and technical efficiency of maize farmers in Rwanda," Land Use Policy, Elsevier, vol. 107(C).
    4. Fang Song & Xuerong Xu, 2023. "How Operation Scale Improve the Production Technical Efficiency of Grape Growers? An Empirical Evidence of Novel Panel Methods for China’s Survey Data," Sustainability, MDPI, vol. 15(4), pages 1-19, February.

    More about this item

    Keywords

    Technical efficiency; Rural China; Concurrent business; Farm size; Stochastic production frontier; J21; Q15;
    All these keywords.

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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