Effect of farmland cost on the scale efficiency of agricultural production based on farmland price deviation

Abstract

The relationship between agricultural production factor prices and production performance has long been a topic of academic discussion. However, current research has paid relatively little attention to the problem of scale efficiency losses in agricultural production caused by deviations in farmland prices. In order to explore the development direction needed to improve China's agricultural competitiveness, we analyzed the deviation mechanism of farmland prices in China and the loss of scale efficiency of agricultural production due to high farmland prices, starting from the perspective of farmland price deviation. Accordingly, based on 1188 micro-farm household survey samples, a threshold regression model was used to provide empirical support for our theoretical analysis in two dimensions: full samples and differentiation of farmland use types. The empirical results show that the problem of high farmland prices prevails throughout China, with the mean farmland price deviation (abbreviated as DEV) in Chinese provinces reaching 1.42, and it is especially high in Shandong (1.88), Henan (1.67), and Heilongjiang (1.59). The deviation is mainly caused by China's special resource endowment and farming culture. At the same time, the current scale efficiency of agricultural production in Chinese provinces is inadequate, with a mean value of only 0.70, and approximately 65% of farmers' actual input size is significantly lower than the optimal input size. The threshold effect test shows that the effect of farmland cost increase on agricultural production scale efficiency exhibits a structural shift from promoting to inhibiting as the degree of farmland price changes from low to high. In particular, in the scenario of overpriced farmland (DEV ≥ 1.16), farmland cost increase inhibits the growth of China's agricultural production scale efficiency. In addition, there is heterogeneity across farmland uses, with grain crops being more likely to be scale-efficient (0.74) than nongrain crops (0.62). The threshold regression results between the grain and nongrain groups further reveal that in the high farmland price scenario, grain crops are more severely inhibited by the rising cost of farmland than nongrain crops. Ultimately, we propose an optimal solution to improve the performance of agricultural production in China in two dimensions: reducing farmland cost and promoting service scale operation.