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Productivity, efficiency and structural problems in Chinese dairy farms


  • Xiaohua Yu


Purpose - 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.

Suggested Citation

  • Xiaohua Yu, 2012. "Productivity, efficiency and structural problems in Chinese dairy farms," China Agricultural Economic Review, Emerald Group Publishing, vol. 4(2), pages 168-175, May.
  • Handle: RePEc:eme:caerpp:v:4:y:2012:i:2:p:168-175

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    References listed on IDEAS

    1. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633.
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    Cited by:

    1. De Zhou & Xiaohua Yu & Thomas Herzfeld, 2015. "Dynamic food demand in urban China," China Agricultural Economic Review, Emerald Group Publishing, vol. 7(1), pages 27-44, February.
    2. Yu, Xiaohua & Abler, David, 2014. "Where have all the pigs gone? Inconsistencies in pork statistics in China," China Economic Review, Elsevier, vol. 30(C), pages 469-484.
    3. Jing You, 2014. "Dietary change, nutrient transition and food security in fast-growing China," Chapters,in: Handbook on Food, chapter 9, pages 204-245 Edward Elgar Publishing.
    4. Tian, Xu & Sun, Feifei & Zhou, Yingheng, 2015. "Technical Efficiency and Its Determinants in China's Hog Production," 2015 Conference, August 9-14, 2015, Milan, Italy 212718, International Association of Agricultural Economists.
    5. Xiaohua, Yu & Binjian, Yan & Zhifeng, Gao, 2014. "Can Willingness-To-Pay Values be Manipulated? Evidences from an Experiment on Organic Food in China," Discussion Papers 169402, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    6. Tao, Hongjun & Luckstead, Jeff & Zhao, Liang & Xie, Chaoping, 2016. "Estimating Restrictiveness of SPS Measures for China's Dairy Imports," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IFAMA), vol. 19(B).
    7. Charlebois, Sylvain, 2016. "Policy-change Triggered Environmental Uncertainty in a Dairy Cooperative: The Case of Mila in South Tyrol," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 7(3).
    8. Xiaohua Yu & Binjian Yan & Zhifeng Gao, 2014. "Can willingness-to-pay values be manipulated? Evidence from an organic food experiment in China," Agricultural Economics, International Association of Agricultural Economists, vol. 45(S1), pages 119-127, November.
    9. Dou, Lei & Yanagishima, Koji & Li, Xin & Li, Ping & Nakagawa, Mitsuhiro, 2015. "Food safety regulation and its implication on Chinese vegetable exports," Food Policy, Elsevier, vol. 57(C), pages 128-134.


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