Social Interactions and Spillover Effects in Chinese Family Farming

Abstract

This paper aims to test the effects of social interaction and input spillovers on the agricultural performance of family farms in mixed paddy rice production (organic and conventional farming). Using survey panel data from a Chinese village, we adopt a Spatial Durbin Model (SDM) derived from spatial econometrics to disentangle the social interaction effect from spillover effects and to control for technological heterogeneities. Our analysis reveals a negative social interaction effect indicating that an increase in the yield of neighbouring plots leads to a decrease in the yield of the plot itself. We also find input spillovers. Labour, capital costs, water and organic pesticides have positive spillovers while external nutrients (nitrogen and phosphate) have negative spillover effects. Our study thus calls for a better understanding of social interactions and spillover effects among farmers in the promotion of sustainable family farming.