Japanization of Rice Production in Jiangsu: An Evidence from Rice-Producing Cooperative in Nantong

• In Event: China’s Provincial Economy: Diversification, Institution and Development

Abstract

Agricultural cooperative named ‘Famer’s Professional Cooperative’ (FPC) is getting popular and is intensely promoted by the Chinese government to improve economic welfare of small farmers. FPCs appear to contribute for small farmers to enhance their cultivation techniques and bargaining powers. On the other hand, growing number of farmers who reside in relatively developed coastal areas tends to persist in small-scale rice production by participating in FPCs, even though they obtain large amount of income from off-farm occupations. There is a close similarity between Japan and coastal area of China in terms of farm management in rice production. This paper investigates the efficiency of rice-production in suburban area of Jiangsu province by estimating the treatment effect of participation in rice-producing cooperative. I adopt propensity score matching (PSM) and difference-in-difference (DID) method to control time-invariant attributes of farmers as well as the difference in farmers’ rice income before the treatment. Estimated results show that no significant difference between participants and non-participants of the cooperative is observed in terms of gross/net incomes from rice production, even though the probability to participate in the cooperative is positively correlated with farmland size. This result indicates that the cooperative not necessarily contributes for the member famers to improve their rice-production incomes. Therefore, in order to prevent Chinese farmers from falling into ineffective rice cultivation like Japan, policy supports to encourage consolidation of farmland and specialization of farmers seem to be crucial to enhance the efficiency in rice production.

Author

• Hisatoshi Hoken, Institute of Developing Economies, JETRO