Crop diversification, land price spillovers, and land governance: evidence from China

Abstract

IntroductionCrop diversification from grain to non-grain production is often considered a threat to food security in many populous countries with limited arable land. Yet its potential spillover effect has not been fully studied. This study explores a unique plot-level dataset to particularly quantify the spillover effect of non-grain production on the land rental price of grain production from the perspective of factor opportunity cost and proposes corresponding land management strategies.MethodsData used in this study came from a field survey conducted in Jiangsu province. OLS method was employed to test the effect of non-grain production on the rent price of grain production farmland, combined with plot-level heterogeneity analysis. In addition, Quantile method was used for robustness check.ResultsOur main finding indicates that converting land use from grain production to non-grain production significantly increases the land rental rate of surrounding plots for grain production by 222.02 yuan/mu, accounting for 28.75% of the total land rent (772.25 yuan/mu). This spillover effect exhibits a stronger trend as the contracted land scale expands. However, the kin relationship among contract parties can weaken this effect, indicating that social ties can work as a mediator in offsetting the negative shock of the rental rate increase due to non-grain production. In order to keep the land rent under control, rural land use is actively harnessed by local governments at a guided price.DiscussionBased on the empirical results, the study recommends comprehensive land use planning and a regionally regulated land transfer market in order to achieve a balance between food security and a diversified agricultural structure.