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As farmland is not effectively utilized from economic or environmental perspectives, this study proposes an institutional system for coordinating farmland use in Japan, examining the role played by communities. We propose a theoretical and conceptual model to identify the conditions for successful farmland use coordination and classify the various types of farmland consolidation into four simplified models. We compare these models in terms of (1) change in profits from individual to collective farmland use for landowners and cultivators, (2) transaction costs for mobilizing farmland, (3) transaction costs associated with collective action, and (4) the possibility of coordinating the interests of community members. Econometric analysis indicates that the promotion of collective actions increases the likelihood of communities with a high level of social capital to coordinate farmland use, concentrate farmland in the hands of large-scale cultivators, and prevent the abandonment of farmland. Overall, the results of this study point to the importance of social capital accumulation in rural communities to achieve high degrees of land consolidation.

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Purpose The purpose of this paper is to analyze and compare the profit efficiency of custom and self-farming methods of rice production in Taiwan. Design/methodology/approach This study examines the nature and extent of the profitability and profit efficiency of custom and self-farming based on a farm survey in Taiwan. Furthermore, it estimates the stochastic profit frontier to measure the degree of inefficiency and analyze the determinants of these inefficiencies. Findings The profitability and profit efficiency of custom farming are lower than for self-farming, and the differences in profitability are more significant for large rice farmers. The estimation results show that the custom farming area and the farmer’s age decrease efficiency and, regardless of the farming style used, larger farms have higher profit efficiency. Research limitations/implications This study’s findings show that self-farming is more favorable than custom farming for profit efficiency. This study examined this problem by conducting a regression adjustment for explanatory variables, but did not remove all self-selection bias, which may occur between profit efficiency and the choice of farming system. Originality/value Previous studies that measured the efficiency of rice farming often considered cost efficiency by the cost function, and ignored the increased profit from producing high-quality rice. This study used a one-step estimation of the profit frontier function to measure the degree of inefficiency and analyze the determinants of this inefficiency.