Aging population, farm succession, and farmland usage: Evidence from rural China☆
Introduction
The issue of an aging society has become a highly prevalent social problem not only in developed countries (Fichtner, 2018) but in developing countries (Masters, 2013). The most significant impact of an aging population, however, occurs in production agriculture. Production agriculture is back-breaking work that relies on labor, and farm operators tend to be older than average worker in the overall workforce. Older workers, on average, tend to be less productive than younger workers. Moreover, due to small land holdings, large family sizes, and higher off-farm wages, young and middle-aged individuals prefer to participate in off-farm labor activities (Rizwan et al., 2017). Older farm operators want to retire from farming, and retirement and succession decisions in family farms are interrelated (Kimhi and Lopez, 1999). As a result, older farm operators face a farm succession problem. In many cases, older farm operators end up with no successors and then have to decide on the future of their farmland—whether to rent it out, hire labor, or participate in a profit-sharing venture by pooling their farmland with others.1
The prosperity and sustainability of agriculture depends on an effective succession of farmland, according to several studies in the literature (Bertoni and Cavicchioli, 2016; Joosse and Grubbström, 2017; Mishra et al., 2010). However, the children of older farmers the new generation of potential farmers are more likely to participate in the off-farm labor market because off-farm income is higher and stable and offers a strategy for exiting agriculture (Corsi and Salvioni, 2017). In addition, the lack of a successor may lead to declines in productivity, financial performance, and innovation in farming (Harris et al., 2012; Sottomayor et al., 2011). Therefore, current old-age operators without successors face the dilemma of farmland usage.
China, a developing country with the world’s largest population, has about 35% of its labor force in agriculture, compared to 2.5% in the United States. According to the third National Agricultural Census, China had about 314 million agricultural operators in 2016. The age distribution of the agricultural operators is interesting. For example, the population under age 35 was about 60 million and accounted for just 19% of the total agricultural operators; the population ages 36–54 was about 149 million and accounted for about 47% of total agricultural operators; and the population age 55 and above was about 106 million and accounted for 34% of total agricultural operators (NBS, 2016). Like the U.S., China suffers from an aging farming population. Since 93% of China’s total agricultural operators are involved in crop production, farmland succession is a serious social problem. Note that in China the state technically owns and controls farmland, but farm families are allocated land that they operate and pass on to the next generation.2 However, farm families can lease their farmland to others but cannot sell it. Land reforms under the Deng Xiaoping era have allowed individuals to lease land from villages.
Readers also should note two salient features of the Chinese farmland structure and ownership. First, under the China’s Household Contract Responsibility System and households have only three rights: to transfer the rights of operation of the farmland, only rural households, as members of the collective village, have the original contractual and operational rights (Wang and Zhang, 2017). Although farmland leasing is emerging in China, farming households can only transfer the rights of operation of farmland, return the contractual rights of the farmland to the collective village, or pass the farmland to their family members. Second, China’s dual-track structure of socio-economic development requires households in mainland China to register as either a Rural Hukou or an Urban Hukou. This law also restricts household migration (and by extension, labor migration) between Hukous. Migration from rural areas to urban areas is possible. Because of Hukou law requirement, however, the opposite is not realistic because only members of a Rural Hukou can receive rights to operate farmland in a village.3 Considering these two features and the rising share of aging farmers, farm operators are concerned about their farmland usage decisions. The issue is paramount in cases where farm operators lack successors.
Therefore, this study’s objective is to investigate the factors affecting farmland usage decisions in the absence of successors in China. We use farm-level data from nine Chinese provinces (see Fig. 1) and multinomial logit modeling technique to study this objective. The survey was conducted in 2015. This study’s contributions are unique in several ways. First, the study addresses a timely issue faced by a country with the largest number of farmers, with smallholdings, and with a large share of farm operators ready to retire. Second, the issue of farmland usage in the absence of a successor is interesting in a country where a farmland market4 does not exit and where economic and political systems (defined Hukous per household) discourage the movement of urban people to rural areas. Finally, this is the first study, to best of our knowledge, to investigate farmland usage by farm operators in the absence of successors.
The rest of this paper is organized as follows. The next section discusses the background of farmland, property rights of farmland, and farmland usage in China. Section 3 presents the survey data and descriptive statistics. The empirical framework and estimation procedure are developed in Section 4. Section 5 analyzes and discusses the empirical findings. The last section concludes the study and provides policy implications.
Section snippets
Background
Land is a key factor of production and the most important asset of livelihood. This is particularly true in China, where resources are distributed unequally between urban and rural areas. Farmland in China takes the role of social security, providing livelihood security, old-age security, and employment security (Yao, 2009). According to China’s Contracting of Rural Land Law (Wang et al., 2015)5
Data and descriptive statistics
We use the survey data from rural Chinese households on rural land and related factors of the markets. The survey was conducted at the beginning of 2015. The selection of research sites for this survey was based on clustering analysis of six indicators (total population, per capita GDP, total area of farmland, share of farmland, agricultural population, and share of agricultural output). Finally 54 counties within nine provinces and regions (Fig. 1) were selected. The survey collected
Empirical framework and estimation procedure
Let us assume that the rural Chinese household maximizes utility and one-period optimization and under the assumption of risk-neutrality is obtained by solving the following optimization problem:
subject to the constraints:where U in Eq. (1) is the farm household’s utility (or welfare) function; C denotes consumption goods purchased in the market; and denote hours of leisure and stock of human capital by the operator, respectively; and
Results and discussion
Table 4 reports estimation results for the MNL model which also were reached based on maximum likelihood and robust variance estimation methods. The reference choice of farmland usage category for the MNL model is I5, reflecting the decision by the farm operator not knowing what to do with the farmland.11 Accordingly, and as mentioned earlier, the estimated coefficients (q = 1, …, M-1) measure the
Conclusions and policy implications
China has a peculiar farmland market, and the populations living in urban and rural areas are strictly defined by residence or Hukou. The government allocates operating rights to farmland to rural Chinese households. The farmland is not a marketable asset, though households can pass it on to the next generation. Farmland is considered a retirement security for many rural Chinese households. However, with the share of household income from farming decreasing and with technological development
Acknowledgments
This paper was sponsored by the key project of National Natural Science Foundation of China: “Research on Rural Land and Relevant Element Market Cultivation and Reform” (No. 71333004); “Farmland Titling: Realistic Background, Policy Objective and Effect Evaluation” (No. 71742003); foreign joint training program for doctoral students of South China Agricultural University (No. 2017LHPY006).
References (48)
- et al.
Farm succession, occupational choice and farm adaptation at the rural-urban interface: the case of Italian horticultural farms
Land. Use Policy
(2016) - et al.
Theoretical foundations of human decision-making in agent-based land use models–A review
Environ. Modell. Softw.
(2017) - et al.
Farm persistence and adaptation at the rural–urban interface: succession and farm adjustment
J. Rural Stud.
(2012) - et al.
Continuity in farming-not just family business
J. Rural Stud.
(2017) - et al.
Macroeconomics and Household Heterogeneity, Handbook of Macroeconomics
(2016) Off-farm labor markets and the emergence of land rental markets in rural China
J. Comp. Econ.
(2002)- et al.
Effects of land lease policy on changes in land use, mechanization and agricultural pollution
Land. Use Policy
(2017) - et al.
Smallholder participation in the land rental market in a mountainous region of Southern China: impact of population aging, land tenure security and ethnicity
Land Use Policy
(2017) - et al.
The influence of local non-farm employment on rural household structure in Northeast Thailand
J. Rural Stud.
(2017) - et al.
Land documents, tenure security and land rental development: panel evidence from China
China Econ. Rev.
(2015)
Three rights separation: China’s proposed rural land rights reform and four types of local trials
Land. Use Policy
The pricing mechanism innovation of Land remediation in hollow village—investigation and thinking on Houzhai River Basin in Guizhou Province
Open. J. Soc. Sci.
Adaptive choice of livelihood patterns in rural households in a farm-pastoral zone: a case study in Jungar, Inner Mongolia
Land Use Policy
Grain subsidy, liquidity constraints and food security—impact of the grain subsidy program on the grain-sown areas in China
Food Policy
Keeping It in the Family: International Perspectives on Succession and Retirement on Family Farms
Determinants of household demand for and supply of farm labour in rural Ethiopia
Aust. J. Labour Econ.
Household composition, labor markets, and labor demand: testing for separation in agricultural household models
Economet.: J. Economet. Soc.
The relationship between farm succession and farm assets on Belgian farms
Sociologia Ruralis
Off-farm employments and land rental behavior: evidence from rural China
China Agric. Econ. Rev.
The politics of the shareholding collective economy in China’s rural villages
J. Peasant Stud.
Once part-timer always part-timer? Causes for persistence in off farm work state of farmers
Bio-Based Appl. Econ.
Rural Settlement and Land Use
Global aging and public finance
Bus. Econ.
The Buck Stops Where? The Distribution of Agricultural Subsidies
Cited by (99)
Is the internet helping farmers build climate resilience? Evidence from rice production in the Jianghan Plain, China
2024, International Journal of Climate Change Strategies and ManagementThe impacts of farmer ageing on farmland ecological restoration technology adoption: Empirical evidence from rural China
2023, Journal of Cleaner ProductionUnderstanding the indirect impacts of urbanization on vegetation growth using the Continuum of Urbanity framework
2023, Science of the Total EnvironmentAsset specificity and farmers’ intergenerational succession willingness of apple management
2023, Journal of Integrative AgricultureDo solid fuels for cooking lead to an increased prevalence of respiratory disease? Empirical evidence from rural China
2023, Energy for Sustainable Development
- ☆
The authors would like to thank the anonymous reviewers for their helpful and constructive comments that greatly contributed to improving the final version of the paper. They would also like to thank the Editor for support during the review process.