Determinants of Grain Production and Technical Efficiency in China

Abstract

A stochastic frontier production function is used to investigate the prospect to bring China's grain production and productivity to higher levels using a panel data set on 30 provinces from 1987–92. Given an irreversible trend of declining agricultural land, the only feasible way to raise total grain output is to increase land productivity if China does not want to rely on large‐scale imports to feed her huge and still growing population. Considerable regional differences in grain yields suggest that there is still a vast potential for raising grain output. The short term solution is to use more land‐augmenting inputs such as fertilisers and irrigation in the medium and low yield regions. However, the law of diminishing returns is in operation as more physical inputs are applied to shrinking land. Growth in grain output in the long term must rely on improvements in technical efficiency.