Land Consolidation, Productivity and Technical Efficiency: Evidence from a Cross Section of Farm Households in China

This article aims to examine whether increasing farm size will improve land productivity for wheat, rice, maize and soybeans under conditions of rapid agrarian transformation in China.We apply panel data methods, including True Fixed Effects (TFE), True Random Effects (TRE) and True Random Effects with Mundlak adjustment (TRE-Mundlak) models to household-level cross-section data from 30 provinces in China in 2011.These models not only enable us to focus on the traditional inverse relationship (IR) measures while controlling for unobservable village-level heterogeneity, but also make it possible to measure managerial performance, namely technical efficiency, across farm size groups.The results show that after controlling for village-level heterogeneity, there is still a significant IR between land productivity and farm size in all the dominant sub-regions for wheat, rice, maize and soybeans, indicating that farms with smaller land holdings do enjoy a land productivity comparative advantage.Thus, from the perspective of protecting food security, the effort to promote consolidation could come at the expense of grain production and therefore should not be pursued.