Family farms plus cooperatives in China: Technical efficiency in crop production

Abstract

With the aim of improving rural living standards and strengthening the security of crop production, China has adopted “family farms plus cooperatives” as the preferred mode of organization in agriculture. We investigate technical efficiency in crop production comparing family farms that are members of cooperatives, either as core members who have taken investment stakes or common members who have not, with their nonmember counterparts. To allow for heterogeneity in production technology among nonmembers, core members, and common members, we adopt a metafrontier estimation technique. Our data sample consists of 384 family farms in Anhui province for the year 2015. Heterogeneity among family farms, whether members of cooperatives or not, is found to be highly significant. Nonmember farms show the lowest technical efficiency and the widest gap between observed and potential production. By contrast, core members of cooperatives show the highest technical efficiency and the narrowest gap between observed and potential production. We infer that cooperative membership may allow farmers to learn more advanced technology and take advantage of productivity-enhancing practices. We further find that age and education of farm heads contribute to greater technical efficiency.