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Why do farmers quit from grain production in China? Causes and implications

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Author Info

  • Jin-Tao Zhan
  • Yan-Rui Wu
  • Xiao-Hui Zhang
  • Zhang-Yue Zhou
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    Abstract

    Purpose – The number of farms engaged in grain production in China has been declining in recent years. Limited efforts have been devoted to examine why producers quit from grain production and how such exits affect China's grain output. Such information, however, is invaluable in understanding whether the exit from grain production should be encouraged and if so, how. The purpose of this paper is to identify the factors that influence farmers' decision to quit from grain production, with a view to drawing implications for devising policies to deal with such exits. Design/methodology/approach – Both descriptive statistics and econometric techniques are used to analyse a set of unique and comprehensive farm-level survey data to identify key factors that affect farmers' decision to quit from grain production. Findings – Key factors that influence a farm to quit from, or stay in, grain production include: family size, the share of farming labour out of total family labour, per capita arable land, the proportion of land used for grain production, the share of family income from grains. It was also found that the level of grain prices and the sunk cost in farming, chiefly in grain production, also affect the likelihood that a household will stay or exit from grain production. Further, farmers in more economically developed regions are more likely to quit from grain production. Originality/value – The paper's findings clearly indicate that farms with a larger scale of grain production and earning higher income from grain are the major contributors to China's grain production. Potential exists for China to raise its total grain output if the land from those exiting farmers is readily made available to larger producers, enabling them to further benefit from the economies of scale. JEL classifications: Q12, Q18

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal China Agricultural Economic Review.

    Volume (Year): 4 (2012)
    Issue (Month): 3 (October)
    Pages: 342-362

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    Handle: RePEc:eme:caerpp:v:4:y:2012:i:3:p:342-362

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    Related research

    Keywords: Agriculture; Cereals; China; Farm exit; Farms; Grain production; Household survey data;

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    References

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    1. Zhang, Linxiu & Rozelle, Scott & Huang, Jikun, 2001. "Off-Farm Jobs and On-Farm Work in Periods of Boom and Bust in Rural China," Journal of Comparative Economics, Elsevier, vol. 29(3), pages 505-526, September.
    2. Suwen Pan & Jaime Malaga & Xiurong He, 2010. "Market liberalization and crop planting decision: a case of China," China Agricultural Economic Review, Emerald Group Publishing, vol. 2(3), pages 240-250, September.
    3. Lisa Pfeiffer & Alejandro López-Feldman & J. Edward Taylor, 2009. "Is off-farm income reforming the farm? Evidence from Mexico," Agricultural Economics, International Association of Agricultural Economists, vol. 40(2), pages 125-138, 03.
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    8. Guilkey, David K. & Murphy, James L., 1993. "Estimation and testing in the random effects probit model," Journal of Econometrics, Elsevier, vol. 59(3), pages 301-317, October.
    9. Ayal Kimhi, 2000. "Is Part-Time Farming Really a Step in the Way Out of Agricultural?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 38-48.
    10. Serra, Teresa & Goodwin, Barry K. & Featherstone, Allen M., 2004. "Determinants Of Investments In Non-Farm Assets By Farm Households," 2004 Annual meeting, August 1-4, Denver, CO 20329, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Thomas Glauben & Hendrik Tietje & Christoph Weiss, 2004. "Intergenerational Succession in Farm Households: Evidence from Upper Austria," Review of Economics of the Household, Springer, vol. 2(4), pages 443-462, 08.
    12. Kimhi, Ayal & Bollman, Ray, 1999. "Family farm dynamics in Canada and Israel: the case of farm exits," Agricultural Economics, Blackwell, vol. 21(1), pages 69-79, August.
    13. Zhang-Yue Zhou & Daniel A Sumner & Hyunok Lee, 2001. "Part-time Farming Trends in China: A Comparison with the Japanese and Korean Experience1," Comparative Economic Studies, Palgrave Macmillan, vol. 43(3), pages 99-132, September.
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