Mechanisation Outsourcing and Agricultural Productivity for Small Farms: Implications for Rural Land Reform in China

Abstract

Agricultural productivity in China has experienced a rapid growth over the past four decades. Between 1978 and 2013, agricultural total factor productivity (TFP) grew at an average rate of 2.86 per cent a year, which is more than three times the global average of 0.95 per cent (Fuglie and Rada 2015). The rapid increase in agricultural productivity has lessened the negative effects of constrained supply of inputs (such as land and water) and adverse seasonal conditions, and contributed to a dramatic expansion of agricultural output. Since the late 1970s, the real gross output value of Chinese agriculture has increased by a multiple of 4.6, from US$129.6 billion in 1978 to US$594.9 billion in 2013 (in the 2004-06 constant price), with total input increasing by just 66.7 per cent over the same period. Increased agricultural productivity has also released rural labour, facilitating rapid urbanisation and industrialisation in China through rural-urban migration. By 2015, about 270 million rural migrants (around 31.7 per cent of the rural population) moved into Chinese cities, providing an abundant labour supply to support urban industrial development.