Capital deepening and land average grain yield convergence: Evidence from China

Area of Science:

• Agricultural Economics
• Agronomy
• Economic Development

Background:

• China's economic development has led to a shift in labor from agriculture to non-agricultural sectors.
• This shift has increased labor costs relative to capital, driving agricultural production towards capital-intensive practices.
• The causes of capital deepening in China's grain production remain unclear despite increased grain output.

Purpose of the Study:

• To investigate the impact of various capital investments on grain yield growth in China.
• To analyze the effect of capital investments on growth convergence in China's main grain production areas.
• To understand the drivers of capital deepening in Chinese grain production.

Main Methods:

• Utilized data from the Compilation of Cost-Benefit Data of Agricultural Products (CCBDAP).
• Examined the relationship between capital investments (chemical fertilizer, pesticide, machinery) and grain yield.
• Assessed β convergence in land output for key crops: early indica rice, japonica rice, wheat, and maize.

Main Results:

• Increases in chemical fertilizer, pesticide, and machinery inputs were key drivers of grain yield growth.
• Evidence of β convergence in average land output was found for major grain crops.
• Capital deepening plays a significant role in China's increasing grain output.

Conclusions:

• Further capital investments are recommended to accelerate grain yield per unit of land.
• Implementing a cross-provincial balance system for cultivated land occupation and compensation is suggested.
• Strategic adjustments in the spatial distribution of grain cultivation are needed to optimize land use and ensure food security.