Effects of fiscal support for agriculture on grain production technical efficiency: empirical evidence from Chinese farms

Abstract

ABSTRACT This study utilizes micro-level farm panel data from 2007 to 2012 to measure the technical efficiency of grain production among farms using a stochastic frontier analysis model. Additionally, it employs a two-way fixed effects model to empirically investigate the impact of fiscal support for agriculture on grain production technical efficiency and its underlying mechanisms. The results reveal significant room for improvement in the technical efficiency of grain production among Chinese farms, with increased fiscal support for agriculture demonstrating a substantial enhancement of their efficiency. This promoting effect only exists in the major grain-producing areas and increases with the increase of farm size. The augmentation of fiscal support for agriculture achieves this goal by augmenting modern agricultural input factors, alleviating financing constraints faced by farms, and optimizing agricultural production infrastructure. Our findings provide guidance for optimizing fiscal policy to support agriculture, promoting agricultural modernization, and achieving food security.