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Does household engagement in concurrent business affect the farm size-technical efficiency relationship in grain production?

Does household engagement in concurrent business affect the farm size-technical efficiency... The purpose of this paper is to examine how households’ engagement in concurrent business (CB), which is measured by the contribution of off-farm income to household income, affects the farm size–technical efficiency (TE) relationship in Northern China.Design/methodology/approachThis paper applies a stochastic frontier analysis method to analyze data on 1,006 rural households collected from four major wheat-producing provinces in Northern China, adopting a translog specification for the underlying production function.FindingsThe analysis yields three findings. First, the farm size–TE relationship is inverted U-shaped for all CB engagement levels higher than 5 percent, and the most technically efficient farm size increases with the level of household CB engagement. Second, how TE varies with the level of CB engagement depends on farm size: an inverted-U relationship for relatively small farms (<10μ), a positive relationship for middle-size farms (10–20μ), and a negative relationship for large farms (>20μ). Finally, the overall TE score, 0.88, suggests that wheat output can be increased by 12 percent in Northern China if technical inefficiency were eliminated.Originality/valueUnlike most previous studies that examine the impacts of farm size and households’ off-farm business involvement separately, this paper examines how these two factors interact with each other. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png China Agricultural Economic Review Emerald Publishing

Does household engagement in concurrent business affect the farm size-technical efficiency relationship in grain production?

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References (54)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1756-137X
DOI
10.1108/caer-11-2016-0179
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to examine how households’ engagement in concurrent business (CB), which is measured by the contribution of off-farm income to household income, affects the farm size–technical efficiency (TE) relationship in Northern China.Design/methodology/approachThis paper applies a stochastic frontier analysis method to analyze data on 1,006 rural households collected from four major wheat-producing provinces in Northern China, adopting a translog specification for the underlying production function.FindingsThe analysis yields three findings. First, the farm size–TE relationship is inverted U-shaped for all CB engagement levels higher than 5 percent, and the most technically efficient farm size increases with the level of household CB engagement. Second, how TE varies with the level of CB engagement depends on farm size: an inverted-U relationship for relatively small farms (<10μ), a positive relationship for middle-size farms (10–20μ), and a negative relationship for large farms (>20μ). Finally, the overall TE score, 0.88, suggests that wheat output can be increased by 12 percent in Northern China if technical inefficiency were eliminated.Originality/valueUnlike most previous studies that examine the impacts of farm size and households’ off-farm business involvement separately, this paper examines how these two factors interact with each other.

Journal

China Agricultural Economic Review – Emerald Publishing

Published: Jan 15, 2019

Keywords: Technical efficiency; Rural China; Concurrent business; Farm size; Stochastic production frontier; J21; Q15

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