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Subsidy or market reform? Rethinking China’s farm consolidation strategy

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  • Rada, Nicholas
  • Wang, Chenggang
  • Qin, Lijian

Abstract

Chinese food security policy is anchored increasingly on the conviction that domestic grain production should be greatly enhanced, and the best way to do so is to expand farm production scale. To that end, an increasing stream of public investment has been directed to the grain sector, in the form for example of farm expansion subsidies. Our purpose is to assess the potential impacts of China’s farm-scale expansion on both yields and per-hectare economic returns. Analysis of a large sample of farm household production data finds (with some exceptions) that grain yields likely will decline as farm size grows, compromising food self-sufficiency targets. More importantly, in only isolated cases would per-hectare economic returns decline with size. Thus, an emphasis on reducing farmland transactions costs may stimulate cropland consolidation and achieve the desired long-term structural transformation.

Suggested Citation

  • Rada, Nicholas & Wang, Chenggang & Qin, Lijian, 2015. "Subsidy or market reform? Rethinking China’s farm consolidation strategy," Food Policy, Elsevier, vol. 57(C), pages 93-103.
  • Handle: RePEc:eee:jfpoli:v:57:y:2015:i:c:p:93-103
    DOI: 10.1016/j.foodpol.2015.10.002
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    References listed on IDEAS

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    2. Chen, H., 2018. "Can Crop Insurance Market Benefit Land Rental Market by Mitigating the Inverse-Relationship Concern," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277003, International Association of Agricultural Economists.
    3. Ying Zhou & Qingbo Zhou & Shouwen Gan & Liying Wang, 2019. "Agricultural Ecological Compensation Policy Models in Developed Countries and China's Policy Development Process," Biomedical Journal of Scientific & Technical Research, Biomedical Research Network+, LLC, vol. 14(4), pages 10803-10805, February.
    4. Luo, Yufeng & Chen, Feifei & Qiu, Huanguang, 2018. "Plot size and maize production efficiency in China: agricultural involution and mechanization," 2018 Annual Meeting, August 5-7, Washington, D.C. 274364, Agricultural and Applied Economics Association.
    5. repec:gam:jsusta:v:9:y:2017:i:10:p:1678-:d:112621 is not listed on IDEAS
    6. Cheng, Shen & Bravo-Ureta, Boris E. & Zheng, Zhihao & Sun, Hao, 2017. "Land Consolidation, Productivity and Technical Efficiency: Evidence from a Cross Section of Farm Households in China," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258533, Agricultural and Applied Economics Association.
    7. Rada, Nicholas E. & Fuglie, Keith O., 2019. "New perspectives on farm size and productivity," Food Policy, Elsevier, vol. 84(C), pages 147-152.
    8. repec:gam:jsusta:v:11:y:2019:i:8:p:2402-:d:225156 is not listed on IDEAS
    9. Chen, Huang, 2017. "Agricultural Risk, Insurance, and the Land-productivity Inverse Relationship," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258212, Agricultural and Applied Economics Association.

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