Farmland Scale and Technical Efficiency in Chinese Agriculture: A Land Transfer Cost Perspective

This study investigates the relationship between farmland scale and technical efficiency. Using a household-level dataset from 10 provinces in China, we employed a flexible Stochastic Frontier Analysis (SFA) model to simultaneously estimate technical efficiency and evaluate its relationship with farmland scale. The results show that the average technical efficiency scores for the full sample, wheat, rice, and maize are 0.677, 0.708, 0.733, and 0.669, respectively, indicating substantial potential for improving China’s agricultural production efficiency. Furthermore, an inverted U-shaped relationship exists between farmland scale and technical efficiency; technical efficiency initially rises and subsequently declines as farmland scale increases. Additional analysis reveals that this inverted U-shaped relationship is moderated by the marginal cost of land transfer. Specifically, a lower marginal cost of land transfer corresponds to a larger optimal farmland scale. The marginal cost of land transfer was captured by proxy variables, including the relief degree of land surface, the slope degree of land surface, and the development level of the village-level land rental market. We conclude that flatter terrain and a better-developed land rental market lead to a larger optimal farmland scale for rural households.