Abstract
Supply shortages and competitive disadvantages are the main problems faced by China’s hog sector. The non-essential import of pork products, triggered by competitive disadvantages, poses great challenges to hog farms. Structural changes are an important policy concern in China and elsewhere. Previous literature has ignored whether the ongoing structural changes from backyard to large farms can contribute to sustainable development. This study adopts the micro-level data of hog farms collected from Jiangsu Province, and uses a two-step metafrontier model and a primal system approach. The empirical results reveal that the ongoing structural changes are capable of boosting the growth in output in China’s hog sector, since the stronger increase in comparable technical efficiency compensates for the inappropriate technology. Furthermore, the ongoing structural changes are also beneficial in the reduction of production costs and in improving competitiveness in China’s hog sector. The decline in technical and allocative inefficiency costs, particularly for technical inefficiency costs, contributes to the cost advantage with the increasing farm size.
Highlights
As one of the world’s largest hog producers, China slaughters more than half the world’s hog numbers
As the main meat consumed by the Chinese, pork consumption increased from 39.6 million metric tons in 2000 to 55.7 million metric tons in 2015, with a rapid annual growth rate of 2.3%
China’s pork importation greatly exceeds the level of domestic shortage. This non-essential importation may be attributed to a cSousmtaipnaebtiliittyiv20e17d, i9s, a69dvantage caused by soaring pork production costs in China [2]
Summary
As one of the world’s largest hog producers, China slaughters more than half the world’s hog numbers. Even if the ongoing structural changes can balance the Chinese domestic pork supply and demand through improved technical progress and increased technical efficiency in the hog sector, the gains may still be insufficient when the increasing hog production costs are taken into consideration. Rae et al [8] revealed that when compared with specialized and commercial farms, backyard farms achieved lower total factor productivity and technical progress, but had a higher technical efficiency through the use of new panel data These results indicated that structural changes from backyard to specialized farms might increase China’s pork outputs. Mosheim and Lovell [16] found that both technical inefficiency costs and allocative inefficiency costs showed a statistically significant reduction as farm size increased This brief literature review illustrates the extensive studies evaluating the effects of structural changes on the productivity and the production costs of the livestock sector. The final section presents our conclusions based on the results and reflects on the corresponding policy implications
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