Market-oriented agriculture and farm performance: Evidence from rural China

Abstract

Part-time and small-scale farming used to be an essential factor in ensuring food security for small Chinese farmers. However, evidence shows that market-oriented farming (MOF) activities, such as renting-in land and cash cropping, are becoming more popular among farmers. This paper investigates the factors affecting farmers’ engagement in MOF and its impact on farm performance (profits, yields and costs). The study uses nationally representative data from a rural household survey and a multinomial endogenous switching treatment regression (MESTR) technique. Findings reveal that socioeconomic attributes, natural and physical assets, and institutions affect farmers’ participation in MOF activities. Renting-in land has allowed rural households to increase their farm profits by about 40%. However, despite increasing farm size, crop yields fell by about 47% due to land renting-in activities. Cash cropping increased both profits and yields by about 64% and 100%, respectively. Finally, the joint participation in renting-in land and cash cropping increased profits by nearly 158% and farm costs rose by about 41%.