Hog Production in China: Technological Bias and Factor Demand

Abstract

Abstract Technological change and factor biases are estimated by employing a translog cost function based on a new adjusted dataset for China's hog production sector. Technological change is found not to have been neutral and the factor bias to be statistically significant towards feed grain-saving technology. It is also found that the demand for feed grain is elastic with respect to its own price and that strong substitution relationships exist with respect to some other inputs. Thus, along with technological biases, the changes in input price could affect hog farmer input behaviors and therefore change factor shares of hog production cost in China. In other words, demand for feed grain is very elastic, which results in feed grain-saving technological bias. Two major policy implications can be drawn that rising feed grain prices could significantly reduce the feed grain input on hog farms and developing specialized hog farms could provide more employment opportunities for rural labor in China because feed grain and labor are complementary.