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Hitotsubashi -RIETI International Workshop on Real Estate Market, Productivity, and Prices

Comments on “Inefficiency in Rice Production and Land Use: A Panel Study of Japanese Rice Farmers” by Professor Ogawa. Hitotsubashi -RIETI International Workshop on Real Estate Market, Productivity, and Prices October 13-14, 2016 Hirosh i Ohashi Economics, U Tokyo. Summarizing the paper.

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Hitotsubashi -RIETI International Workshop on Real Estate Market, Productivity, and Prices

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  1. Comments on “Inefficiency in Rice Production and Land Use: A Panel Study of Japanese Rice Farmers” by Professor Ogawa Hitotsubashi-RIETI International Workshop on Real Estate Market, Productivity, and Prices October 13-14, 2016 Hiroshi Ohashi Economics, U Tokyo

  2. Summarizing the paper • A good contribution to the literature, where little quantitative work has been done on agricultural sector in Japan. • Thepurposeof the paper is to (1) estimate the efficiency of rice production in Japan, and (2) identify the differences between efficient and inefficient rice farmers. • The paper identifies the increasing returns to scale of 1.02. • Inefficient farmers are found to be inflexible in utilizing inputs. • Efficient farmers tend to produce non-rice crops if they have many smaller plots of land. • Data from 2008 to 2013 on Rice Production Cost Statistics with 5453 observations over 47 prefectures.

  3. （Yen） 30,000 less than 0.5ha 25,000 0.5 1ha ～ 20,000 1 2ha ～ 2 3ha ～ 3 5ha ～ 10 15ha 7 10ha ～ ～ 15,000 5 7ha ～ 10,000 5,000 0 0 2 4 6 8 10 12 ha （ ） Average Costs by land size (per 60 kg of rice production) Averageincome per 60kg of rice production Land size average (excl Hokkaido and Okinawa) Data source: Production size: Census of Agriculture and Forestry 2010 Income and cost: Cost of Production of Rice, Wheat and Barley, 2009 Census 2000: Rice Production

  4. 60 60 40 40 20 20 0 0 0 50 100 150 200 0 2,500 5,000 7,500 10,000 12,500 15,000 Frequency on Sizes Data: Census of Agriculture and Forestry 2010 Data: Census of Agriculture and Forestry 2010 Number of Rice Farmers (10 thousands) Number of Rice Farmers (10 thousands) Rice-cultivated area (ares) [by 5ares segments] Daily yield of rice-farm labor per person (yen) [by 500yen segments]

  5. Comments on Estimation • Production function; factor demand function; dynamic factor demand function; and land-utilization function are independently estimated. However, they are closely linked, and the estimation can be handled in a unified way. • Selection bias (exits of farmers; or changes in plot size for a particular farmer) • Inputs endogeneity

  6. Other Comments • What lead to the paper’s conclusion on the differences between efficient and inefficient farmers? • Anticipation on the opportunity to convert farm land to other uses (Saito and Ohashi, 2011) • Subsidies on farmers producing feed (not food) rice • Eliminating production subsidies on substituting from rice to beans or wheat. Etc • Welfare analysis is perhaps also possible with external estimates on demand elasticity of food rice (e.g., -3.45 from Arahata, 2010) • The paper opens up many interesting policy questions to ask on the effectiveness of agricultural policies.

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