Kevin Z. Chen

The quiet revolution in Asia's rice value chains

There is a rapid transformation afoot in the rice value chain in Asia. The upstream is changing quickly—farmers are undertaking capital‐led intensification and participating in burgeoning markets for land rental, fertilizer and pesticides, irrigation water, and seed, and shifting from subsistence to small commercialized farms; in some areas landholdings are concentrating. Midstream, in wholesale and milling, there is a quiet revolution underway, with thousands of entrepreneurs investing in equipment, increasing scale, diversifying into higher quality, and the segments are undergoing consolidation and vertical coordination and integration. Mills, especially in China, are packaging and branding, and building agent networks in wholesale markets, and large mills are building direct relationships with supermarkets. The downstream retail segment is undergoing a “supermarket revolution,” again with the lead in change in China. In most cases the government is not playing a direct role in the market, but enabling this transformation through infrastructural investment. The transformation appears to be improving food security for cities by reducing margins, offering lower consumer rice prices, and increasing quality and diversity of rice. This paper discusses findings derived from unique stacked surveys of all value chain segments in seven zones, more and less developed, around Bangladesh, China, India, and Vietnam.

Migration, Local Off-Farm Employment, and Agricultural Production Efficiency: Evidence from China

This paper studies the effect of local off-farm employment and migration on rural households’ technical efficiency of crop production using a five-year panel dataset from more than 2,000 households in five Chinese provinces. While there is not much debate about the positive contribution of migration and local off-farm employment to China’s economy, there is an increasing concern about the potential negative effects of moving labor away from agriculture on China’s future food security. This is a critical issue as maintaining self-sufficiency in grain production will be critical for China to feed its huge population in the future. Several papers have studied the impact of migration on production and yield with mixed results. But the impact of migration on technical efficiency is rarely studied. Methodologically, we incorporate the correlated random-effects approach into the standard stochastic production frontier model to control for unobservable that are correlated with migration and off-farm employment decisions and technical efficiency. The most consistent result that emerged from our econometric analysis is that neither migration nor local off-farm employment has a negative effect on the technical efficiency of grain production, which does not support the widespread notion that vast-scale labor migration could negatively affect China’s future food security.

Borrowing from the Insurer: An Empirical Analysis of Demand and Impact of Insurance in China

We conduct a randomized controlled trial to examine the impacts of delayed premium payment on insurance uptake and the subsequent investment decisions among small-holder farmers in rural China. Our results show uptake among those with the delayed payment option is three times as high as among those without the option. Using the random variation in uptake thus induced, we find a positive impact of insurance adoption on household investment in production, especially higher-risk activities.Farmers in developing countries face relatively large income risk and have limited access to formal financial products that can help them manage their risk. We present results from a randomized controlled trial in rural China designed to understand whether a small change in the timing of a premium payment for a swine insurance contract helps to overcome an important barrier to insurance demand and, if so, whether the resulting increase in insurance would allow farmers to increase investment in activities that expose them to the risk being insured against. We find that insurance take-up is three times higher among those who were given the option to pay at the end of the insured period.

Is small still beautiful? A comparative study of rice farm size and productivity in China and India

Purpose - – The farm size-productivity relationship has long been the subject of debate among development economists. Few studies address this issue for China, and those that do only with outdated data sets poorly representing the current situation after the past decade of rapid change, which includes the rapid development of land rental markets, village labor out-migration and use of farm machines. Meanwhile, many studies have researched this relationship for Indian, which is undergoing similar changes except for the development of active land rental markets. The purpose of this paper is to measure the farm size-productivity relationship under the situations of rapid transformation in China and India. Design/methodology/approach - – Based on the data of 325 Jiangxi and 400 Allahabad rice farmers in 2011, the survey covered multiple plots of each household in one/multiple growing season(s). The authors use the production function approach and the yield approach, and control for farmland quality, imperfect factor markets, and farm size measurement error, to identify the farm size-productivity relationship. Findings - – The regressions show that land yields increase with plot size both by season and over the year in China. This may be one of the reasons that farm sizes are growing in some areas. In India, however, the inverse farm size-productivity relationship is observed by the study, despite recent changes. Moreover, land yields increase with farm machine use in both China and India. This result contributes to the debate over whether mechanization improves yields or just expands the land frontier. Originality/value - – The paper empirically estimates the farm size-productivity relationship under rapid agrarian transformation in both China and India based on a unique data set collected by the authors in a detailed primary survey. The paper considers measurement error in the analysis, which adds values to this type of analysis.

Food safety regulatory systems in Europe and China:A study of how co-regulation can improve regulatory effectiveness

Abstract Food safety has received a great deal of attention in both developed and developing countries in recent years. In China, the numerous food scandals and scares that have struck over the past decade have spurred significant food safety regulatory reform, which has been increasingly oriented towards the public-private partnership model adopted by the Europe Unions (EU) food safety regulatory system. This paper analyzes the development of both the EUs and Chinas food safety regulatory systems, identifies the current challenges for China and additionally considers the role of public-private partnership. The success of co-regulation in the food regulatory system would bring significant benefits and opportunities for China. Finally, this paper recommends additional measures like training and grants to improve the privates sector effectiveness in co-regulating Chinas food safety issues.

Making health insurance pro-poor: evidence from a household panel in rural China

BackgroundIn 2002, China launched the largest public health insurance scheme in the world, the New Cooperative Medical Scheme (NCMS). It is intended to enable rural populations to access health care services, and to curb medical impoverishment. Whether the scheme can reach its equity goals depends on how it is used, and by whom. Our goal is to shed light on whether and how income levels affect the ability of members to reap insurance benefits.MethodsWe exploit primary panel data consisting of a complete census (over 3500 individuals) in three villages in Puding County, Guizhou province, collected in 2004, 2006, 2009 and 2011. Data was collected during in-person interviews with household member(s). The data include yearly gross and net medical expenses for all individuals, and socio-economic information. We apply probit, ordinary least squares, and tobit multivariate regression analyses to the three waves in which NCMS was active (2006, 2009 and 2011). Explained variables include obtainment, levels and rates of NCMS reimbursement. Household income is the main explanatory variable, with household- and individual-level controls. We restrict samples to rule out self-selection, and exploit the 2009 NCMS reform to highlight equity-enhancing features of insurance.ResultsPrior to 2009 reforms, higher income in our sample was statistically significantly related to higher probability of obtaining reimbursement, as well as higher levels and rates of reimbursement. These relations all disappear after the reform, suggesting lower-income households were better able to reap insurance benefits after the scheme was reformed. Regression results suggest this is partly explained by reimbursement for chronic diseases.ConclusionsThe post-reform NCMS distributed benefits more equitably in our study area. Making health insurance pro-poor may require a focus on outpatient costs, credit constraints and chronic diseases, rather than catastrophic illnesses.

Innovations in financing of agri-food value chains in China and India: Lessons and policies for inclusive financing

Purpose - – The purpose of this paper is to synthesize lessons from the agricultural value chain models and their associated financing mechanisms in China and India as to provide policy recommendations on how best to facilitate development of efficient and inclusive value chains. Design/methodology/approach - – The paper builds on a review of the existing literature on agricultural value chains and their financing mechanisms, and draws lessons from it for strengthening interface between product and financial markets in order to enable smallholders capture benefits of the value addition. Findings - – From the comparative review of value chain financing mechanisms and current policy contexts the authors find dominance of internal financing of value chains (in terms of provision of inputs, technology and services) in both the countries. Value chain finance from commercial banks and other financial institutions is limited and mainly through tripartite agreements among the financing institutions, lead firms and farmers. Practical implications - – The lessons drawn from various value chain models and their financing mechanisms provide feedback to financial institutions and policymakers to take measures to strengthen value chain finance in smallholder agriculture. Originality/value - – The paper undertakes a rigorous review of the existing value chain models and their financing mechanisms in light of the most recent research on emerging innovations and development strategies, in order to glean key lessons for policy recommendations on strengthening linkages between financial and product markets.

Growth and distributive effects of public infrastructure investments in China

Public infrastructure investments are seen as one of the key engines of economic growth in China. Yet, there is little quantitative evidence on the growth and distributive effects of public infrastructure investments (PII) in China. This paper applies a macro-micro simulation method, to assess the effects of PII on the national economy using an inter-temporal dynamic CGE model and its distributive effects on individual households using a microsimulation. The results showed that higher PII substantially raises productivity in all sectors and income in all household categories. Higher PII also helps reduce poverty and modestly improves equality. The results not only suggest that increasing PII can drive economic growth in China, but also that it is a useful strategy for the promotion of inclusive growth. In particular, China could consider investing more in rural infrastructure to reduce inequality between rural and urban households in the future.

Impacts of agricultural public spending on Chinese food economy

Purpose - The purpose of this paper is to develop a dynamic computable general equilibrium (DCGE) model to analyze economy-wide impacts of different types of public spending in China. A particular focus is placed on their impacts on food economy. Design/methodology/approach - In this paper, DCGE model is developed to analyze economy-wide impacts of different types of public spending in China. The effects of increased agricultural subsidies, agricultural R&D, and irrigation are simulated by using China DCGE model. Findings - The results show that public spending has significant impact on food production, price, and trade. The increased public spending on agricultural R&D, irrigation, and agricultural subsidy also has modest impacts on other sectors such as industry, service, and GDP growth. Originality/value - The paper constructs the China dynamic CGE model and analyzes economy-wide impacts of different types of public spending in China, especially for the food economy.

Managing Climate Change Risk in China's Agricultural Sector: The Potential for an Integrated Risk Management Framework

Climate change poses a serious threat to the future food security of China, which is among the most disaster-prone countries in the world. This paper discusses the implications of climate change for Chinas agricultural sector. Its main objectives are to identify the agricultural risks associated with climate change, to introduce a conceptual framework for agricultural climate risk management and to enumerate key adaptation strategies, challenges, and recommendations.