Abstract
Given the importance of Chinese foodgrain production both in China and in the world food market, it is useful to explore the sources of the increased variabilities of China's foodgrain production (Stone and Zhong, 1989). A production function with composite error structure and a heteroscedastic disturbance is applied to cross‐section and time‐series data from China. The function provides information on the contributions of inputs to production variance and therefore on risk. It is found that production variance is positively related to sown area, chemical fertiliser and irrigation, and is negatively related to electricity use. However, most of the estimates determining the marginal risk effects lack statistical significance. This suggests that the measured controllable factors do not contribute very significantly to Chinese foodgrain production variability.
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