Is Aging the Important Factor for Sustainable Agricultural Development in Korea? Evidence from the Relationship between Aging and Farm Technical Efficiency

Abstract

This paper examines the effects of aging and income subsidies on farm efficiency in Korea by utilizing the Korean Farm Household Economic Survey from 2008 to 2015. A stochastic frontier model with a non-monotonic assumption on the effect of efficiency factors is implemented to reflect a super aging and less developed production structure in Korean agriculture. This study finds continuously decreasing farm efficiency with age, which contradicts the commonly assumed inverted-U relationship between age and productivity. Especially, we find that labor is the most important factor to explain recent farm efficiency losses in Korea. Furthermore, this paper finds that the Korean income subsidy has a negative effect on farm efficiency. Our results provide two policy implications for the government of Korea. First, even though the "Returns to the Farm and Rural program" is appropriate, Korea should modify the program to encourage more young people to participate this program rather than old people, in order to attain the sustainable development of the agricultural sector. Second, a policy maker in Korea should consider a coupled subsidy that is directly related to farm production rather than a decoupled subsidy, regardless of the lower efficiency of the coupled subsidy in achieving agricultural development.

The Role of Knowledge in Sustainable Agriculture: Evidence from Rice Farms’ Technical Efficiency in Hanoi, Vietnam

“…In this case, the characteristic determinants were gender, age and education. We further argue that while age can be a proxy for farming experience and skill [20,42], which is important in agriculture, education can be a proxy for technical knowledge and creativity [20,43]. Consequently, age can be seen as an informal type of knowledge and education as formal knowledge.…”

“…SFA has been used to analyze the efficiency of rubber farms [16], soybean farms [17], citrus farms [18], mixed organic farms [19], and, especially, rice farms [20][21][22][23][24][25][26][27][28]. In particular, Battese and Coelli [26] proposed a time-varying SFA model for panel data to analyze 38 paddy rice farmers from an Indian village between 1975 and 1985.…”

“…A recent study by Seok, Moon, Kim and Reed [20] on Korean paddle rice farms did not focus on the efficiency itself but its determinants. The findings show that higher values of age, education, share of labor, share of land, share of non-farm revenue, share of income subsidy and debt rate have negative impacts on the farm's efficiency.…”

“…Following Battese and Coelli [27] and Seok, Moon, Kim and Reed [20], among others, we also examined the effects of some explanatory variables on the rice farm's technical efficiency. In this case, the characteristic determinants were gender, age and education.…”

Evaluation and Influencing Factors of Sustainable Development Capability of Agriculture in Countries along the Belt and Road Route

“…For the sustainable development of agriculture, aging and income subsidies are two of the most important influencing factors [47]. Labor is most important in explaining the farm efficiency losses, while income subsidy has a negative effect on farm efficiency.…”