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The Relationship between Farm Size and Productivity in Chinese Agriculture


  • Chen, Zhuo
  • Huffman, Wallace E.
  • Rozelle, Scott


This paper examines the relationship between farm size and productivity in China's agriculture. In developing agriculture where there is a broad range of farm sizes, farm size and productivity or output per unit of land are often found to be inversely related. In China, where average farm size is small and the distribution of farm sizes is relatively compact, farm size and productivity are weakly inversely related. However, when we utilize the egalitarian principle during land allocation in China and use imputed homogenous land area rather than actual land area in the regression, the inverse relationship between farm size and productivity disappears. Hence, the strong inverse relationship that some studies have found are undoubtly due to a number of methodological problems, including the failure to account properly for land quality differences and the method of land distribution. Applying the principal agency theory, we also discuss the possibility that market inefficiency may contribute to the inverse relationship. We examine the necessity and validity (Hahn & Hausman 2002) of the instrumental estimation applied in the paper. The corresponding variance estimates are adjusted as Murphy & Topel (1985) suggested.

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  • Chen, Zhuo & Huffman, Wallace E. & Rozelle, Scott, 2005. "The Relationship between Farm Size and Productivity in Chinese Agriculture," 2005 Annual meeting, July 24-27, Providence, RI 19565, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea05:19565

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    1. Boisvert, Richard N., 2002. "Analysis of a Re-Focused Agricultural Policy within a Farm-Household Framework Some Data Requirements," Workshop on the Farm Household-Firm Unit: Its Importance in Agriculture and Implications for Statistics, April 12-13, 2002, Wye Campus,Imperial College 15727, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
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    5. Catherine J. Morrison Paul & Richard Nehring & David Banker, 2004. "Productivity, Economies, and Efficiency in U.S. Agriculture: A Look at Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(5), pages 1308-1314.
    6. Kumbhakar, Subal C & Biswas, Basudeb & Bailey, DeeVon, 1989. "A Study of Economic Efficiency of Utah Dairy Farmers: A System Approach," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 595-604, November.
    7. Nigel Key & William McBride, 2003. "Production Contracts and Productivity in the U.S. Hog Sector," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 121-133.
    8. Adelaja, Adesoji O. & Miller, Tracy & Taslim, Mohammad, 1998. "Land Values, Market Forces, and Declining Dairy Herd Size: Evidence from an Urban-Influenced Region," Agricultural and Resource Economics Review, Cambridge University Press, vol. 27(01), pages 63-71, April.
    9. Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
    10. Sharma, Khem R. & Leung, PingSun & Zaleski, Halina M., 1999. "Technical, allocative and economic efficiencies in swine production in Hawaii: a comparison of parametric and nonparametric approaches," Agricultural Economics, Blackwell, vol. 20(1), pages 23-35, January.
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