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Is Larger Scale Better? Evidence from Rice Farming in Jianghan Plain

Abstract: Small-scale household agricultural production has been in conflict with China's agricultural modernization. In the context of vigorously promoting rural land circulation and moderate scale management nationwide, research on the relationship between farm size and scale efficiency has become increasingly important. In this paper, we use the “DEA-OLS” two stage method to analyze data from 368 surveys of rice farming households in the Jianghan Plain. The scale efficiency of rice farming was calculated, and the relationship between farm size and scale efficiency investigated. The results indicate that (1) the rice farm size is generally small in Jianghan Plain, with an average of 0.77 ha. The average scale efficiency is 0.88, and it is the main factor limiting an increase in comprehensive technical efficiency. Moreover, 88.32% of households are in the stage of increasing returns to scale. (2) There is a stable inverted “U” type relationship between rice farm size and scale efficiency. Considering characteristics of the householder, the household and land quality, the maximum scale efficiency corresponds to a household with 5 ha of rice farm. (3) Among householder characteristics, age has a significant negative influence on scale efficiency, and scale efficiency is lower for a household whose householder is engaged in non-farm work than for one whose householder is devoted to farming. As for land quality, there was a significant positive effect of irrigation on scale efficiency. Among family characteristics, the application of a machine during the seeding process increased scale efficiency by 3.07%. Therefore, we suggest that local government should actively promote rural land circulation, implement a staged-scale management subsidy, and other forms of support for the purchase of agricultural machinery and technical popularization. Increased investment in irrigation improvements and mechanical facilities and encouragement of farmers to enlarge their farm size could improve scale efficiency and farming profit and lead to the development of moderate scale management.