Evaluating spillover effect of non-grain production on land rent: Empirical insights from Jiangsu, China

Abstract

Affected by low profitability of food crops, non-grain production has put a threat on Chinese food security. Though widely discussed, its impact on land rent has not been fully studied. This study explores the spillover effect of non-grain production from the perspective of factor opportunity cost. Data are extracted from 273 plots in Jiangsu province, China. Outcomes show that non-grain production significantly increases the land rent of surrounding plots by 222.02yuan/mu. This spillover effect exhibits a stronger trend as contracted land scale expands. However, the kin relationship among contract parties can weaken this effect, which points out that social ties can work as a mediator in resisting the external shock of non-grain production. Similarly, guided price set by governments is an indicator when land rent reaches an unreasonable level and hinders grain production. Far from being a spontaneous process of pure market forces, rural land use is actively harnessed by government at all levels. Hence, the study recommends a comprehensive land use plan and regional regulated land transfer market in order to achieve a balance between food security and diversified agricultural structure. Restrictions should not be imposed on the informal land transfer among acquaintances.