Does Security of Land Operational Rights Matter for the Improvement of Agricultural Production Efficiency under the Collective Ownership in China?

• Author: Xianqing Ji,Shouying Liu,Youyi Li,Jianan Yan
• DOI: http://doi.org/10.1111/cwe.12362
• Published date: 01 January 2021
• Date: 01 January 2021

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 87–108, Vol. 29, No. 1, 2021 87

Does Security of Land Operational Rights Matter for

the Improvement of Agricultural Production Effi ciency

under the Collective Ownership in China?

Xianqing Ji, Shouying Liu, Jianan Yan, Youyi Li*

Abstract

Under the “separation of three rights” policy, the impact of security of land operational

rights on agricultural production efficiency has attracted much attention in recent

years. Data envelopment analysis and mediation effect analysis were applied to 888

family farms run by new-type agricultural operators from Songjiang to identify the

mechanism of the effect of land operational rights security on agricultural production

effi ciency through long-term investment. The results show that greater security of land

operational rights generally increased agricultural production effi ciency. Approximately

37.94 percent of the impact could be explained by long-term investment. The results

also indicate that signifi cant heterogeneity exists in the effect of land operational rights

security on agricultural production efficiency at various levels of the family farms’

effi ciency distributions. It is suggested that government should legalize land operational

rights and give them a status equal to those of households’ contractual rights and land

ownership rights in China’s future land tenure reform.

Key words: agricultural production effi ciency, new-type agricultural operator, security

of land operational rights

JEL codes: Q12, Q13, Q15, Q18

I. Introduction

China’s agricultural system is based on small-scale farms. This is a result of its household

responsibility system (HRS), which was introduced between 1978 and 1984 (Che,

*Xianqing Ji, Professor, School of Public Administraiton, Nanjing Audit University, China. Email: jixianqing191@

sina.com; Shouying Liu (corresponding author), Professor, School of Economics, Renmin University, China.

Email: liusy18@126.com; Jianan Yan, PhD Candidate, School of Economics, Renmin University, China. Email:

jianan_yan@163.com; Youyi Li, PhD Candidate, School of Public Administration, Nanjing Agricultural University,

China. Email: 970850498@qq.com. The authors acknowledge the fi nancial support of the National Natural Science

Foundation of China (No. 71673234), the Ministry of Education Foundation of China (No. 16JZD024), and the Six

Key Industries Talent Paramount Program of Jiangsu Province, Ch ina.

Xianqing Ji et al. / 87–108, Vol. 29, No. 1, 2021

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

88

2012). The average farm size in China fell from 0.7 hectares in 1985 to 0.55 hectares in

2000 (Huang et al., 2012). The operation of small-scale farms led to lower agricultural

production efficiency (Jia and Petrick, 2014; Chen et al., 2015). In 2014, the central

government released a new rural land tenure reform called the “separation of three

rights,”1 which aimed to encourage moderate-scale agricultural operations2 to improve

agricultural production effi ciency (Shen, 2015; Wang and Hu, 2016). The ratio of scale

operation farmland area to actual cultivated farmland area in rural China had already

reached 28.6 percent at the time of the third agricultural census in 2016.3 Liu and Long

(2020) found that more farmland had been transferred to operate than in earlier years, and

the ratio of farmland area transferred by family farms to the total transferred farmland

was 58.38 percent in 2016. The “separation of three rights” policy may enable those new

operators to transfer land, which will have a profound impact on agricultural production

effi ciency in China (Ma et al., 2017; Wang and Zhang, 2017; Zhou et al., 2018).

Empir ical studies from Africa and other countries in Asia showed that improved

security of land tenure may increase agricultural production effi ciency by encouraging

long-term investment (Barrows and Roth, 1990; Place and Otsuka, 2001; Michler

and Shively, 2015), although the study by Migot-Adholla et al. (1991) stated that

no relationship was found between security of land tenure and farmers’ investment

behavior. For studies in China, with its collective ownership regime of rural land,

Zhang et al. (2011) and Zhou et al. (2018) indicated that land tenure security increased

agricultural production efficiency, but Ma et al. (2017) found that increasing land

tenure security by providing land certifi cates to households had a negative impact on

agricultural production effi ciency. Gao et al. (2017) argued that farmers who operated

on transferred-in land (with land operational rights) had less incentive to increase long-

term investment than those who operated land for which they were responsible (with

household contractual operation rights). Qiu et al. (2017) also found that transferred-

in land tended to be less efficient than land for which the farmers were responsible.

We fou nd, on the one hand, that most existing studies concerning China’s rural land

1In China, land is owned by the collective. The “separation of three rights” refers to the subdivision of

contractual land operation rights (signed by farmers with the collective) into land contractual rights (owned by

the collective farmers) and land operational rights (owned by farm operators). This results in the separation of

ownership rights, land contractual rights, and land operational rights.

2 See The Proposals on Guiding the Transfer of Rural Land Operational Right Orderly and Developing

Agricultural Moderate Scale Operation. Available from: http://www.gov.cn/gongbao/content/2014/

content_2786719.htm (online; cited April 2020).

3Data are available from: www.gov.cn/xinwen/2019-08/07/content_5419492.htm (online; cited April 2020).

The norms for scale operation farmland were above 50 mu in the provinces in south China and above 100 mu

in the provinces in north China according to the National Bureau of Statistics of China.