Exploring the relationship between plot size and fertilizer use efficiency: evidence from large-scale farming in China

Abstract

PurposeThis paper investigates the relationship between plot size and fertilizer use efficiency (FE) in Chinese large-scale farming and searches for the underlying mechanisms that explain this relationship.Design/methodology/approachBased on a household- and plot-level data set of large-scale production units (LSPUs) from Jiangsu and Jiangxi Provinces, the technical and fertilizer use efficiency of large-scale rice production is estimated by applying a translog stochastic frontier production function. The authors impose a monotonicity condition on the translog frontier using a three-step procedure to get theoretically consistent efficiency estimates. A beta regression model is then used to explore the association between plot size and LSPUs' efficiency in fertilizer application.FindingsThe average FE for the sampled plots is around 30%, which shows a large potential for LSPUs to reduce fertilizer use. A U-shaped relationship is observed between plot size and FE. The authors relate this non-linear pattern to the substitution of labour with capital-intensive technology and the efficiency differences in terms of farming performance between family and hired workers.Originality/valueFirst, according to the authors’ knowledge, this paper is a first attempt to study the size–efficiency relationship focussing on fertilization practices of large-scale farming. The second contribution lies in the large-scale ranges of the plot-level data set. Third, efforts are made to reveal the mechanisms determining the plot size–FE relationship. Fourth, the authors provide guiding evidence for policymaking, as they show that the size of individual plots deserves equal attention in land consolidation decisions. Methodologically, this paper improves existing estimates of single-factor technical efficiency issued from a restricted production frontier model.