Productivity, efficiency and structural problems in Chinese dairy farms
AbstractPurpose – The purpose of this paper is to identify the structural problem in the Chinese dairy sector. There exists a large number of low-efficiency, small-scale farms, and productivity inequality between small and large farms keeps increasing, which is a possible driving force behind the Melamine scandal in 2008. Design/methodology/approach – Using the stochastic frontier production function, this paper estimates and compares the changes in technology and technical efficiency between backyard, small-scale, medium-scale and large-scale dairy farms in China over the period between 2004 and 2008. Findings – There are compensating effects between technology and technical efficiency. However, low yield for backyard farms is mainly caused by traditional low-yield varieties, even though the technical efficiency is very high, which cannot compensate for the low technology. Research limitations/implications – The author put the assumption of constant return to scale mainly due to the data availability. Such an assumption implies that there are no scale-effects between the different scales in productivity, and the productivity difference is explained by technology and technical efficiency. Practical implications – In order to solve the structural problems, Chinese governments should help small-scale farmers to adopt new high-yield varieties, to subsidize small-scale farmers, and to train farmers to master the complicated skills for raising high-yield varieties. Originality/value – The paper gives another possible explanation for the Melamine scandal of milk powder in 2008. If the structural problem cannot be solved, similar food safety scandals could happen once again.
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Bibliographic InfoArticle provided by Emerald Group Publishing in its journal China Agricultural Economic Review.
Volume (Year): 4 (2012)
Issue (Month): 2 (May)
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Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Find related papers by JEL classification:
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633, December.
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