Inefficiency in Rice Production and Land Use: A panel study of Japanese rice farmers

Author Name OGAWA Kazuo (Kansai Gaidai University)
Creation Date/NO. March 2017 17-E-020
Research Project Study on Corporate Finance and Firm Dynamics
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First Draft: March 2017
Revised: February 2019


In this study, an empirical analysis was conducted on the behavior of Japanese rice producers from the standpoint of efficiency in production by using the panel data of the Rice Production Cost Statistics by the Ministry of Agriculture, Forestry and Fisheries. The stochastic frontier production function, which comprises four production factors (land, labor, capital stock, and materials), was estimated and the inefficiency indices of production were calculated. Based on this information, the efficient and inefficient rice producers were identified, and the factor demand behavior and characteristics of the land use for rice production were compared. It was found that production-inefficient rice producers did not make any adjustments in employment in the short or long run, even if there was a change in the wages. The certified farmers, who are supposed to play a leading role in enhancing efficiency of agricultural operations, tend to lower the land utilization rate of rice production; moreover, the more production-efficient the certified farmers are, the larger the effects of such activities, which is the opposite of what was intended by policymakers.

Published: Ogawa, Kazuo, 2020. "Inefficiency in rice production and land use: A panel study of Japanese rice farmers," The Japanese Economic Review, Vol. 71, pp. 641-669.