Policy distortions, farm size, and the overuse of agricultural chemicals in China

Abstract

Understanding the reasons for overuse of agricultural chemicals is critical to the sustainable development of Chinese agriculture. Using a nationally representative rural household survey from China, we found that farm size is a strong factor that affects the use intensity of agricultural chemicals across farms in China. Statistically, a 1% increase in farm size is associated with a 0.3% and 0.5% decrease in fertilizer and pesticide use per hectare (P < 0.001), respectively, and an almost 1% increase in agricultural labor productivity, while it only leads to a statistically insignificant 0.02% decrease in crop yields. The same pattern was also found using other independently collected data sources from China and an international panel analysis of 74 countries from the 1960s to the 2000s. While economic growth has been associated with increasing farm size in many other countries, in China this relationship has been distorted by land and migration policies, leading to the persistence of small farm size in China. Removing these distortions would decrease agricultural chemical use by 30-50% and the environmental impact of those chemicals by 50% while doubling the total income of all farmers including those who move to urban areas. Removing policy distortions is also likely to complement other remedies to the overuse problem, such as easing farmer's access to modern technologies and knowledge, and improving environmental regulation and enforcement.

Keywords: crop yield; environmental protection; fertilizer use efficiency; socioeconomic barriers; urbanization.

Fig. 1.

Relationships between farm size and chemical use per area and output per area in China. (A) Farm size (measured by sowing area) and fertilizer use per area; (B) farm size and pesticide use per area; (C) farm size and crop output per area; (D) farm size and labor productivity (crop output per labor). Data source is CRHPS 2015; see SI Appendix, Materials and Methods, for more details on this dataset. All data in Fig. 1 have been log-transformed. Each data point represents an average value of a variable within a certain farm size group (29 farm size groups in total). The bubble size of each data point represents the number of farms in each farm size group, which can be found in SI Appendix, Table S1.

Fig. 2.

Variations of farm size across countries and years. (A) Farm size changes with agricultural labor productivity (agricultural value added per rural population) in different countries; (B) farm size changes with urbanization; (C) distribution of farm size in China and other world regions on the basis of farm area; (D) distribution of farm size in China and other world regions on the basis of household numbers. Data sources for A and B were FAO and World Bank Open Data. The share of land area and household number in China were compiled using data from CRHPS 2015 (see SI Appendix, Materials and Methods, for more details about this dataset), and the share of land area and household in other regions was compiled using data from Lowder et al. (24). Note that in A and B, we adjusted the values for farm size by controlling for the differences in arable land per capita across countries. In C and D, the share of land area in farms of different sizes worldwide is compiled from the data from 80 countries excluding China. Red dots represent China, and blue dots represent other countries.

Fig. 3.

Policy distortions and scenarios with rectification of distortions. (A) Agricultural and (expected) nonagricultural incomes for rural farmers as a function of farm size. The nonagricultural labor incomes are calculated using Mincerian earnings equation conditional on rural workers’ education, working experience, etc. (see SI Appendix, Materials and Methods, for more details). “Distorted” refers to the case in which rural workers are constrained by the land institutions and Hukou system to work in agriculture, although they could earn more in the nonagricultural sectors. “Efficient” refers to the normal case that rural workers stay in the agricultural sector to earn more. The number on the x axis represents the average farm size of each farm group, and the number of farms and the ranges of their size in each farm group can be found in SI Appendix, Table S1. (B) Agricultural chemical use, fertilizer loss and output, and labor income under different scenarios. “World ave.” refers to the situation in which the average farm size and its distribution in China follows the world average level. “Int. trend” refers to the situation in which the average farm size and its distribution in China follows the international trend found in Fig. 2A, and the farm size under this scenario is smaller than that under the World ave. scenario. Distortions refer to effects of China’s land allocation policy and the Hukou system on labor and land markets, illustrated by the effects of removing them so that rural labor can move out of agriculture freely, and land use rights can be freely traded.