The long-run relationship between farm size and productivity

Abstract

PurposeThe purpose of this paper is to examine the long-term relationship between farm size and productivity in China at the national level.Design/methodology/approachIn contrast to the micro-data examination conducted by earlier literature, in this study, the authors use household aggregate panel data on 29 provinces in China for 1988–2012. Using the panel data PMG model, the authors control the factor of difference in land quality due to the fixed effect in each province, and the authors consider the difference in the long-run coefficients of farm size and land productivity rather than the difference in their short-run relationship. Thus, the authors examine the long-term relationship between farm size and productivity. Furthermore, the authors examine the robustness of this relationship in the long-term using samples of rice, wheat and corn production by region.FindingsIn contrast with the findings presented previously, the authors find that the relationship between farm size and agricultural productivity is statistically positive in the long term.Originality/valueThe relationship between farm size and agricultural productivity is a key research issue in agricultural and development economics. In China, many studies have provided evidence of the inverse relationship between farm size and agricultural productivity at the family farm level. However, this inverse relationship seems to reflect specific regions and specific periods in the relationship between farm size and land productivity. At the nationwide level, in the long-term, this is not an inverse but a positive relationship. It is desirable to expand farm size for the long-term development of agriculture.