Land rental market, off-farm employment, and technical efficiency:
Farm household rice production in Jiangxi province, P.R. China
Shuyi Feng
China Land Policy Centre, Nanjing Agricultural University, 210095, Nanjing, P.R. China
Department of Social Sciences, Wageningen University, Hollandseweg 1, 6706 KN, Wageningen, The Netherlands
Abstract
This study estimates the technical efficiency in rice production and examines the effect of land rental market participation, and the resulting land tenure contracts, and off-farm employment on technical efficiency in rural China, using the one-step stochastic frontier approach. Data from household and plot level survey held in three villages in Northeast Jiangxi province are used to estimate the model. We find that the mean technical efficiency of rice production in Northeast Jiangxi province is 0.82, ranging from 0.36 to 0.97. Results from the determinants of technical efficiency show that households renting in land achieve higher technical efficiency than households that do not participate in land rental market. However, rented in plots are technically as efficient as contracted plots. Additionally, participation in migration does not have an effect on technical efficiency.
Key Words: land rental market, migration, technical efficiency, stochastic frontier approach, China
1. Introduction
Economic reforms initiated in the late 1970s have drastically affected the development of Chinese agricultural sector. In particular, the switch from collective farming to the household responsibility system (HRS) has resulted in an important change in the land tenure system. The implementation of this new land tenure system brought about a rapid growth of agricultural productivity in the early reform years (1979-84) because of the institutional innovation, which links farm households' income closely with their own performance . The rising agricultural productivity decreased the demand for labour in agriculture, providing a strong incentive for rural labourers to shift to off-farm employment. An off-farm economy, consisting of jobs in Township and Village Enterprises (TVEs), in urban centres and more recently private enterprises, has emerged since the early 1980s and has accelerated its growth since 1995 .

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