Exploring a Moderate Operation Scale in China’s Grain Production: A Perspective on the Costs of Machinery Services

Yu Xu,Liangjie Xin,Xiubin Li,Yahui Wang,Minghong Tan

doi:10.3390/su11082213

Abstract

Due to the indivisibility of agricultural machinery in production, limited farm sizes have reduced mechanization efficiency and increased the cost of grain production in China. As a result, the development of a moderate-scale farming system has been proposed by academic communities and policy makers. However, it is still hotly debated how to determine a moderate farm scale. We offer a new perspective on the costs of machinery services. This manuscript employs the threshold model and uses the nationally representative data from the 2015 China Rural Household Panel Survey (CRHPS) to investigate the role of farm size expansion relative to per area machinery services expenditures (PAMSE). The empirical results reveal that there is a nonlinear relation between the farm size and PAMSE. Specifically, farm size expansion can reduce the PAMSE by improving mechanization efficiency in all cases, while the magnitude of cost-saving is progressively reduced in the process of farm scale expansion. In particular, a 1 mu (1 mu = 1/15 ha) increase in the farm scale could only lead to a 0.3% decrease in the PAMSE when the farm size exceeded 50 mu, which indicates that 50 mu is a minimum efficient farm scale to achieve most economies of scale. Therefore, we suggest that persistent efforts should be devoted to improving farmland circulation efficiency and developing scale farms. More importantly, governmental supporting policies, such as agricultural subsidies, need to attach more importance to these large farms.

Highlights

Agricultural machinery commonly acts as a substitute for the labor force, due to rapidly increasing non-farming wages in the context of industrialization and urbanization
The data used in this research are nationally representative, and the endogeneity problem caused by a sampling bias can be largely ignored; in addition, to ensure a pure estimated result, our models take into account control variables related to the region, family, household head, farm, and land parcel to solve the problem of missing variables
When the farm scale is less than 3.1 mu, a 1 mu increase causes a 20.1% decrease in the per area machinery services expenditures (PAMSE), which can be viewed as a considerable cost saving; this economy of scale fell to 6.2% when the farm size ranged from 3.1 mu to 6 mu, and as the farm size further increased to a range of 6 mu to 16 mu, a 3.9% decrease in the PAMSE was caused by a 1mu increase in the farm scale

Summary

Introduction

Agricultural machinery commonly acts as a substitute for the labor force, due to rapidly increasing non-farming wages in the context of industrialization and urbanization Such a process has been experienced in many developed countries [1,2,3,4,5]. Since a widespread regional difference occurs in the farming schedule in China, service providers are able to operate several months through migration, and this model of service supply significantly improves a farm’s access to mechanization services [13]. This mechanization service mode was initially derived from cross-regional mechanized grain harvesting in the Jiangsu province [14]. According to the 13th Five-Year Plan for the Agricultural Mechanization Development of China, the comprehensive level of mechanization for wheat production, rice production, and maize production are 93.7%, 78.1%, and 81.2%, respectively [15]

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Conclusion