Mechanization services, farm productivity and institutional innovation in China

Abstract

Purpose The purpose of this paper is to investigate the impact of mechanization services on farm productivity in Northern China from an empirical perspective, with the aim to identify the underlying market and institutional barriers. Design/methodology/approach The authors apply the regression method with the control of village fixed effects to examining the relationship between capital–labor ratio, mechanization service ratio and farm productivity, using the panel data collected in 2013 and 2015 by CCAP. Findings Mechanization services improve farm productivity through substituting labor, but it may generate a less positive impact on farms who do not have self-owned capital equipment. Originality/value It is the first study to investigate how mechanization services affect farm productivity for grain producers in Northern China.

The impact of land renting-in on farm productivity: evidence from maize production in China

“…Lessees renting in large areas of land tend to own more equipment, and the greater operational scale increases farm productivity by achieving the potential of machinery or other assets (Foster and Rosenzweig, 2017). However, Yi et al (2019) confirmed that self-owned equipment has a similar effect in agriculture as mechanization services. For these reasons, when asset inputs and other investments that represent farmer heterogeneity are controlled for, there should be insignificant relationship between land size and farm productivity (Assunção and Ghatak, 2003), and thus rented-in land size should not significantly affect farm productivity.…”

“…For those productive landholders, they have high agricultural capacities and are likely to invest in asset equipment (Feng et al , 2010). Yi et al (2019) proposed that the sunk costs and long payback period of asset investment result in small farms investing less in asset equipment. However, by renting in land, lessees can increase mechanization, as evidenced by the dramatic development of agricultural mechanization services in rural China over the last few decades (Luo, 2018).…”

“…In accordance with Sheng et al (2019), maize yield is defined as the total maize output (quantity) divided by the maize production area. Although the average yield of maize per mu is used to represent farm productivity by Sheng et al (2019) and Yi et al (2019) [4], considering that the skewness of the yield distribution poses some problems on our estimates, the natural logarithm of maize yield is used as the dependent variable in this paper [5].…”

“…Binswanger-Mkhize et al (2009) and Hazel et al (2010) proposed that small farms have advantages such as superior incentives and lower supervision and labor costs. Other studies using datasets from developed counties have found a positive relationship between land size and farm productivity (Paul et al , 2004; Hornbeck and Naidu, 2014), because large farms are more likely to be mechanized (Foster and Rosenzweig, 2017), and mechanization increases productivity in agriculture (Yi et al , 2019). Some studies have found a nonlinear relationship between farm size and productivity, and explained this finding in terms of labor-market transaction costs and the ability of machines to accomplish tasks at greater operational scales (Foster and Rosenzweig, 2017).…”

Strategies to reduce nutrient pollution from manure management in China

“…The small land areas of many smallholder farms mean that mechanization is limited, but there are engineering opportunities to design small liquid and solid manure application equipment. So, with formal and informal land consolidation and transfer increasing, and cropping farmers in the same village growing the same crop and using small-scale contractors to harvest, e.g., maize and other crops [51] , there is great opportunity for mechanization to improve resource use efficiencies in these situations. China is speeding up agricultural mechanization and upgrading farming machines and facilities [52] .…”