Analysis on scale economies of the plot in China’s agricultural production and its sources

GU Tianzhu1 JI Yueqing1 ZHONG Funing1

(1.China Center for Food Security Studies, Nanjing Agricultural University)

【Abstract】This paper discussed economies of scale as well as its sources and influences of inseparability of factors on agricultural economies of scale. Taking three major food crops, namely wheat, corn and rice as examples, it studied influences of the plot size on machine use, labor input, land investment, yield per unit area and production cost of per unit product by using sample data collected from eight provinces. The study found that an increase in the plot size implied a decrease in the cost of machine use, an increase in the possibility of mechanical utilization and land investment, and a decrease in the labor input per unit area. Besides, the per unit cost of rice production decreases with the increase in the plot size, which indicated economies of scale. However, it found a U-shaped relationship between the per unit costs of wheat and corn production and the plot size, which showed a shift from economies of scale to diseconomies of scale. Furthermore, the results showed a U-shaped relationship between the rice yield per unit area and the plot size on one hand, and a negative correlation between the yield of wheat and corn per unit area and the plot size on the other hand. Economies of scale in terms of the cost meant that land consolidation might reduce the production cost and increase farmers’ incomes. And the negative correlation between the yield per unit area and the plot size suggested that the abandoned plot should be the focus of land-consolidation policies. Besides land consolidation, collective farming was an important approach and a useful supplement to achieve economies of the plot.

【Keywords】 plot size; production cost of per unit product; yield per unit area; economies of scale;


Download this article

(Translated by WANG Zhen)


    [1]. ① According to the author’s compilation of the data collected by observing stations in villages by the Ministry of Agriculture of the People’s Republic of China, by the end of 2013, the average land area managed by farmers in villages was 9.8 mu and was divided into 5.1 plots. Among them, there were 2.9 plots which were less than 1 mu and 1.4 plots with the area of 1–3 mu, and only 0.8 plot with the area exceeding 3 mu. It is clear to find narrowness and fragmentation of the land. [^Back]

    [2]. ① The Department of Price of National Development and Reform Commission of People’s Republic of China. National Agricultural Cost-benefit Data Assembly in 2013 (全国农产品成本收益资料汇编2013), Beijing: China Statistics Press, (2013). [^Back]

    [3]. ① In the process of data collection, sample plots whose yield per unit area is 3 times larger or 1/3 time smaller than the median value of the yield per unit area within villages are excluded. It is discovered during the verification that the yield per unit area is unreasonably exaggerated or reduced due to the mistakes made in data collection (data of the yield or area). It does not matter that much to employ other tools to exclude extreme abnormal values. [^Back]

    [4]. ① In this investigation, labor employment implied in purchasing agricultural machine services is not included in the meaning of variable regarding whether laborers are employed. [^Back]

    [5]. ① Restricted by data, the setting of variables of land investment is relatively simple, only with the measurement of whether the land investment has been made rather than detailed data such as the sum of investment (including the investment type and investment). [^Back]

    [6]. ① Related results are not presented in this paper due to limited space. [^Back]


    1 Cai, F. The Economics of Being Poor: Agriculture and Rural Economy (穷人的经济学:农业依然是基础). Beijing: Social Sciences Academic Press, (2007).

    2 Cai, R. Journal of Nanjing Agricultural University (Social Sciences Edition) (南京农业大学学报(社会科学版)), (4) (2015).

    3 Ding, Q., Ding, W., Yang, W. et al. Acta Agriculturae Zhejiangensis (浙江农业学报), (6) (2013).

    4 Li, G. & Zhong, F. Chinese Rural Economy (中国农村经济), (4) (2006).

    5 Lyu, T., Ji, Y. & Yi, Z. Journal of Agrotechnical Economics (农业技术经济), (2) (2014).

    6 Tan, S. Journal of Agrotechnical Economics (农业技术经济), (4) (2011).

    7 Xu, Q., Yin, R. & Zhang, H. Economic Research Journal (经济研究), (3) (2011).

    8 Eatwell, J. Milgate, M. & Newman, P. The New Palgrave: A Dictionary of Economics (新帕尔格雷夫经济学大辞典). Beijing: Economic Science Press, (1992).

    9 Bentley, J. W., 1987, “Economic and Ecological Approaches to Land Fragmentation: In Defense of a Much-maligned Phenomenon”, Anthropology, 16(16): 31–67.

    10 Burton, S., and Russell King, 1982, “Land Fragmentation and Consolidation in Cyprus: A Descriptive Evaluation”, Agricultural Administration, 11(3): 183–200.

    11 Carter, M. R., and Y. Yao, 2002, “Local versus Global Separability in Agricultural Household Models: The Factor Price Equalization Effect of Land Transfer Rights”, American Journal of Agricultural Economics, 84(3): 702–715.

    12 Chen, Z., Wallace E. Huffman, and Scott Rozelle, 2009, “Farm Technology and Technical Efficiency: Evidence From Four Regions in China”, China Economics Review, 20(2): 153–161.

    13 Fleisher, C. M, and Y. H. Liu, 1992, “Economies of Scale, Plot Size, Human Capital and Productivity in Chinese Agriculture”, Quarterly Review of Economics and Finance, 32(3): 112–123.

    14 Mwebaza, Rose, and Richard Gaynor, 2002, Land Market, Land Consolidation, and Land Readjustment Component, Rural Development Institute, The Government of the Republic of Uganda.

This Article


CN: 11-1262/F

Vol , No. 02, Pages 30-43

February 2017


Article Outline


  • 1 Introduction
  • 2 Analysis framework and measurement model
  • 3 Data sources and descriptive analysis
  • 4 Analysis on fitting results of the model for scale economies of the plot and the sources
  • 5 Research conclusions and policy implications
  • Footnote