conversion margins for the major uses of agricultural land and their variations in shandong...

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Conversion Margins for the Major Uses of AgriculturalLand and Their Variations in Shandong Province,ChinaWang Xingjie a b , Gu Shuzhong c , Zhang Xinhua a , Wu Hong a , Zhou Hong a & WenWujun da Institute of Geographic Sciences and Natural Resources Research, Chinese Academy ofSciences , 100101, Beijing , Chinab Graduate University of Chinese Academy of Sciences , 100049, Beijing , Chinac Institute of Resources and Environmental Polices, Development Research Center of theState Council , 100010, Beijing , Chinad Research Center for Sustainable Development of Shandong Province, Shandong NormalUniversity , 250014, Jinan , Shandong , ChinaPublished online: 20 May 2013.

To cite this article: Wang Xingjie , Gu Shuzhong , Zhang Xinhua , Wu Hong , Zhou Hong & Wen Wujun (2011) ConversionMargins for the Major Uses of Agricultural Land and Their Variations in Shandong Province, China, Chinese Journal ofPopulation Resources and Environment, 9:1, 55-62, DOI: 10.1080/10042857.2011.10685019

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55

Chinese Journal of Population, Resources and Environment Vol.9 No.1 March 2011

Conversion Margins for the Major Uses of Agricultural Land and Their Variations in Shandong Province, China

Wang Xingjie1, 2, Gu Shuzhong3, Zhang Xinhua1, Wu Hong1, Zhou Hong1, Wen Wujun4

1. Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences, Beijing 100101, China;2. Graduate University of Chinese Academy of Sciences, Beijing 100049, China;

3. Institute of Resources and Environmental Polices, Development Research Center of the State Council, Beijing 100010, China;4. Research Center for Sustainable Development of Shandong Province, Shandong Normal University, Jinan Shandong 250014, China

1 Introduction

Conversion Margin is an important tool to analyze the competition among different land uses (Raleigh, 1978). Currently, the study efforts on land conversion margin only involve the following simple analyses, namely, non-rent margin for land use (Liu et al., 2005, 2006; Liu, 2009), urban area position and urban land use (William, 1964), the price rating assessment of urban land and urban best regional structure (Lin, 1993), and land use control and the supervision on land utility partition (Cheng, 2001). At pres-ent, few studies are concerned with the conversion margin of agricultural lands, but it is exactly practical and signifi-cant for the decision-making on country food security and farmland protection to analyze the conversion margins for the major uses of agricultural land and their variations. In addition, from 2004, the state has launched a series of policies that focus on food production subsidies to benefit farmers. Direct subsidies for grain farmers, agricultural material comprehensive subsidies, and high-quality grain seed subsidies have increased the comparative returns from grain production to some extent. However, are the cur-rent subsidies enough to ensure farmers’ grain production and cultivated land protection to be more economically and reasonably? In order to answer the above questions, through the household survey data of Shandong Province, this study attempts to calculate the revenue conversion margin between the main food crops (wheat, corn) and the main non-food crops (vegetables, fruits, forests) of Shan-dong Province analyze the influence due to the changes of food subsidies on the conversion margin, and is expected to provide basis for country food security and farmland protection.

Abstract: It is of practical significance for the decision-making on country food security and farmland protection to analyze the conversion margins for the major uses of agricultural land and their variations. Based on the panel data of wheat, corn, veg-etable, fruit, and forests productions from 520 investigated farmer households of 13 investigated villages in Shandong Province from 2003 to 2009, and using Cobb-Douglas production function, the revenue conversion margins can be obtained separately, between different grain-crops (wheat, corn) and different non-grain crops (vegetable, fruit, forests), and the conversion relationship between growing grain( wheat, corn) and going out for non-farm work. The results show that from 2003 to 2009, growing wheat and corn are more economically and reasonably for farmers, compared with growing vegetable, but growing wheat and corn are becoming less economically and less reasonably day by day, compared with planting forests. Moreover, the conversion margin between wheat and fruit shows obvious scissors difference. Just from 2007, farm-ers’ growing fruit became economically and reasonably, but until 2009, compared with going out to work after abandoning farm-land, growing wheat had no economic rationality. From 2003 to 2009, farmers’ growing corn is more profitable than growing fruit and going out for non-farm work after abandoning farmland. The subsidies for wheat and corn have increased farmers’ comparative income from food production remarkably, but the subsidies cannot change the general tendency that farmers transform food (wheat, corn) production into non-food (especially forests) production. The revenue difference between growing wheat, corn and vegetable and growing fruit and forests is being pulled ceaselessly bigger, and the tendency that farmers transform wheat, corn and vegetable growing lands into fruit and forests growing lands has become in-creasingly apparent.Key words: agricultural land, farmer, conversion margin, C-D production function, subsidies, Shandong Province

此间距15mm

此间距上下7mm

Receive 20 July 2010, accept 17 October 2010

Corresponding author: Wen Wujun ([email protected])

7—wang xingjie（2013320改）.indd 55 2013-3-20 9:50:51

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2 Data sources and research method

2.1 Data sources and samples

The sample data of this paper are from the Policy Research Office of the CPC Central Committee and the Rural Constant Observation Point Office of Agricultural Ministry. With stratified random sampling method, the plowland type, woodland type, and garden type peasant households were chosen firstly; then the plain type, moun-tain type, and hill type households were chosen. There are totally 13 investigated villages in Shandong Province: 01: Dayuji Village in Yujixiang of Ling County, Dezhou Prefecture; 02: Nanyu Village in Yedianxiang of Mengyin County, Linyi Prefecture; 03: Zhangloudian Village in Heguanxiang of Qingzhou City, Weifang Prefecture; 04: Zhangguan Village in Diao Town of Zhangqiu County, Jinan Prefecture; 05: Dujia Village in Ningyang Town of Ningyang County, Taian Prefecture; 06: Poliwang Village in Rencheng District, Jining Prefecture; 07: Zhaohuankou Village in Shuangqiaoxiang of Yuncheng County, Heze Prefecture; 08: Guoweizi Village in Yanggu Town of Yanggu County, Liaocheng Prefecture; 09: Xixinan Vil-lage in Boxing Town of Boxing County, Binzhou Prefec-ture; 10: Zhangyang Village in Huaguanxiang of Guangrao County, Dongying Prefecture; 11: Xiaogucheng Village administrated by Rizhao Street Office, Rizhao Prefecture; 12: Liugou Village administrated by Guliu Street Office of Laiyang City, Yantai Prefecture; 13: Qianhuangpu Village in Baogou Town of Tengzhou City, Zaozhuang Prefecture, respectively (Fig. 1).

According to the high, middle, and low income stan-dards, 40 typical investigated farmer families were chosen in every investigated village. The entire farmer production

and operation data of 520 investigated households in 13 investigated villages are applied in this paper from 2003 to 2009 in Shandong Province. Among these investigated villages, 11 villages continuously grow wheat and corn, 2 villages rice and potato, 4 villages oil crops, 9 villages vegetable, 1 village fruit(apple) , and 1 village forests. For the reason that rice growing has higher requirements on hydrothermal conditions, most regions of Shandong Prov-ince haven’t natural conditions for planting rice except for Rizhao and Jining. The comparative returns from potato planting are too less, so potato isn’t the main food crop in Shandong Province. Wheat and corn can meet the natural and economic conditions well in Shandong Province, and are most widely planted, so in this study, wheat and corn are chosen as food crops. The area for growing vegetable, fruit, and forests is less than that for growing wheat and corn. However, in whole Shandong Province, the natural and economic conditions required by the growing of veg-etable, fruit, and forests are ready completely. So vegetable, fruit, and forests are chosen as non-food crops in this study. In addition, wheat planting doesn’t compete with corn planting, so the revenue conversion margins between differ-ent food crops (wheat, corn) and different non-food crops (vegetable, fruit, forests) should be calculated separately.

2.2 Methods

2.2.1 Data preprocessing

All inputs and outputs of various crops are subject to the accounting at constant prices per hectare of land in 2005. The land areas of wheat, corn and vegetables adopt the sown areas, but the areas of fruits and forests adopt the actual operating areas of the farmers at the end of the year. The total revenue of wheat, corn, vegetables and fruits should be calculated based on the index of gross agricul-tural output value in Shandong Province; the revenue of forests should be calculated based on the index of gross forestry output value in Shandong Province; and the mate-rial inputs in various crops should be calculated based on the general price index of agricultural production means in Shandong Province; while the working-day labor costs should be calculated based on the index of actual average wage of workers in the city where the surveyed house-holds reside. Since a majority of the non-farm workers are confined in Shandong Province, the wage-related revenue under non-farm employment should be calculated based on the actual wage index in Shandong province. However, the

0 50 100 200Kilometers

N

w E

S

Fig. 1 Investigated sample distribution map


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der the given C-D production function. As long as the pro-duction function remains unchanged, the cost input Q and the corresponding maximum net revenue W will change; yet the slope α of the intensive margin line will not change. If the production function changes, the intensive margin line will become a bunch of straight lines through the origin

with slopes of αj. In the Equation αj=Wj

Qj, Qj refers to the

practical input under a certain production function, while Wj refers to the corresponding maximum net revenue under such practical input.

If the maximum net revenue from grain crops is higher than that from non-grain crops, then the conversion mar-gin between the grain crops and non-grain crops will be the maximum net revenue from grain crops. Otherwise, it will be the maximum net revenue from non-grain crops. Therefore, the maximum net revenue from grain crops should reach the conversion margin between the grain crops and non-grain crops in order to prevent the “non-grain conversion” of the land by the farmers. This involves the regulation of the conversion margin or the maximum net revenue. In practice, there are several ways available to get the intensive margin line of grain production go through the conversion margin between the grain crops and non-grain crops. In order to protect the farmers’ enthusiasm for agri-cultural production and promote agricultural diversification, the revenue of the farmers from non-grain production will generally be maintained, and the following 3 ways will be adopted to improve the farmers’ revenue from grain pro-duction. First, change the grain production function, and increase the slope of intensive margin line of grain crops to eventually make the intensive margin lines of grain and non-grain crops coincide with each other (The coincidence between the two intensive margin lines indicates the same maximum net revenue from the two types of crops under the same total practical input, but not necessarily the same combination of input factors.), including raising prices, increasing production and inputs in “shortcoming” factors, and reducing excessive factor inputs etc.; Second, main-tain the production function unchanged, and pull up the intensive margin line of grain crops with inputs outside the system and ultimately make it go through the conversion margin, mainly including the direct subsidies of cost and revenue; the third way combines the first and second ways by not only changing the production function within the system, but also getting access to the subsidies outside the system.

actual wage index in 2009 should be replaced by the index of per capita wage-related net revenue of the farmers in Shandong Province in 2009.

2.2.2 Theoretical method

The conversion margin or the maximum net revenue needs to be derived from continuous functions. Since the revenue and cost data of practical observation are discrete, it is first necessary to fit the discrete revenue and cost data into continuous production and cost functions. According to different agricultural production practices and different data of observation, the production function varies greatly in form. Cobb-Douglas production function (C-D production function) comprehensively reveals the impact on revenue by technology, cost and production scale and has general application; meanwhile, due to the self-duality between C-D production function and cost function, the cost function can also be derived in the production function fitting (Tang, 1998a; Ni et al., 2004; Tang et al., 2005). Finally, the maxi-mum net revenue under the conditions of C-D production function can be easily calculated with the fitted production function and cost function (Tang, 1998b). Thus, this paper adopts the C-D production function in the conversion mar-gin calculation.

Under the C-D production function, the maximum net revenue is:

W=(1−|R|)Y (1)

Where W is the maximum net revenue from growing a certain crop, Y is the total revenue from growing this crop; R=∑n

i=1bi, bi refers to the elasticity of the ith production factor. According to Equation (1), in order to maximize the net rev-enue from production, |R|<1 is essential, i.e., the production must stay within the conversion zone. At the same time, with |R|<1, the minimum standard under the analysis on econom-ic rationality of farmers’ grain production will be secured.

Under the practical cost input,

W′=αQ′ (2)

W=αQ (3)

In the above Equations (2) and (3), W is the theoretical maximum net revenue from growing a certain crop, Q refers to the practical total cost input, and α refers to the slope. Q′ refers to a certain practical input based on the observed data, and W′ refers to a certain maximum net revenue point under such practical input.

Equation (3) shows that the practical intensive margin line is a straight line through the origin with a slope of α un-


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2.2.3 C-D production function model

By adopting C-D production function model, the ex-plained variables are the total revenues per unit area of wheat, corn, vegetables, fruits and forest (including the by-product value). There are 5 explaining variables re-spectively for wheat, corn, vegetables and fruits: seed and seedling cost, fertilizer cost, power and irrigation cost, machinery cost and labor input cost. Among the above, the fertilizer cost includes the farmyard manure cost, chemi-cal fertilizer cost, pesticide cost and agricultural film cost. The machinery cost includes animal labor cost, machinery operating cost, fixed assets depreciation and maintenance cost, and small agricultural implements purchase cost; la-bor input cost = [labor inputs (daily)-hired labor (daily)] × working-day labor cost + hiring cost, without considering land acquisition cost, other indirect inputs and the taxes in 2003. As the material input in forests merely refers to the total operating cost without such segments as other crops, the forest production function model has only 2 explaining variables, operating cost and labor input. The panel cost and revenue data of the surveyed households growing wheat, corn, vegetables and fruit trees and forests for 7 consecutive years from 2003 to 2009 are used to establish models with fixed effect and variable intercept and fitted into production functions based on the least square method.

Under the fitted production function, the maximum net revenue from grain (wheat and corn) and non-grain (veg-etables and fruits) production of each surveyed household is calculated with formula (1). The intensive margin lines of grain (wheat and corn) and non-grain (vegetables, fruits and forest) production will be obtained by substituting the full-sample average maximum net revenue and average total cost into formulas (2) and (3). After the entry of subsidies, the maximum net revenue from grain and non-grain produc-tion corresponding with the average total cost of the farm-ers’ annual grain (wheat and corn) production is the actual conversion margin of grain production.

2.2.4 Translation of subsidies, total costs and maxi-mum net revenues

(1) Translation of subsidies. According to the 2009 Sum-mary of Benefiting-farmers Policies in Shandong Province, in 2009, the total subsidies for wheat per hectare in various prefectures and cities in Shandong province amounted to 1 409.55 yuan. During the period from 2004 to 2009, the subsidy level in 2009 was the highest and will remain high in the next few years with the increasingly intensified ef-

forts of the central government in promoting and benefiting agriculture. The study of the impact of the subsidies from 2004 to 2008 on farm land revenue thus is of little practical significance, so this paper adopts the subsidy level in 2009.

(2) Translation of total costs and maximum net revenues. Among the samples, there are 2 villages growing no wheat and 2 villages growing no corn, and only 1 village growing fruits and forests which is Nanyu Village, Yedian Township, Mengyin County, Linyi. The full study on the economic rationality of farmers’ grain production should be based on the existing valid samples and translate the total costs of and maximum net revenues from grain and non-grain pro-duction at surveyed villages with missing data. In order to reduce the impact brought by the differences in the natural, economic and social conditions and the farmers’ production level in difference regions, this paper translates the missing data with existing sample data on the basis of the farm land production and operation level capable of reflecting the above differences to a certain extent. The translation for-

mula is: Ri = T; where Ri is the maximum net revenue or

total cost in the entire province or various surveyed villages with missing samples, Si is the maximum net revenue or total cost of the farm land in the entire province or various surveyed villages, S is the average maximum net revenue or total cost of the farm land of existing samples, and T is the maximum net revenue or total cost of grain and non-grain production of existing samples.

2.2.5 Calculation of revenue from abandoning farmland

The capital input that the farmers save by abandoning farm land is calculated based on the total capital input per household in grain (wheat and corn) production from 2003 to 2009, while the labor saved and the revenue from the saved labor converting to other industries should be calcu-lated based on the net revenue from outbound employment of the labor force previously engaging in grain (wheat and corn) production from 2003 to 2009. The revenue from abandoning farm land should be the total capital input plus the net revenue from outbound employment.

3 Results

3.1 Changes in conversion margin

During the period from 2003 to 2009, under differ-ent total cost input levels, such as 7 721yuan, 7 779 yuan,

Si

S


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7 880 yuan, 7 786 yuan, 7 234 yuan, 6 891 yuan and 6 241 yuan per hectare in each year, the different conversion margins between the wheat production and vegetables, fruits and forest production as well as different conversion points between the revenue from wheat production and that from abandoning the farm land are shown respectively in Table 1 and Figs.2-5. Except for 2003, the maximum net revenue from wheat production after subsidies had always been the conversion margin between wheat production and vegetables production, and the gap between the maximum net revenue from wheat production after subsidies and that from vegetables production is widening since 2007. It in-dicates that it is more economically rational for the farmers to grow wheat, except in 2003, compared to the vegetables (Table 1, Fig. 2). Similarly, the conversion margin shows distinct scissors difference around 2007 between wheat and fruits. Before 2007, growing wheat was more profitable

than growing fruits; while since 2007, it has been more economically rational for the farmers to grow fruits, com-pared to growing wheat (Table 1, Fig. 3). During the period from 2003 to 2009, with an increasingly widening gap, the maximum net revenue from forests had always been higher than that from wheat production after subsidies, which indi-cates that it is less economically rational for the farmers to grow wheat, compared to growing forests (Table 1, Fig. 4). During the period from 2003 to 2008, with a gradually nar-rowing gap, the revenue from abandoning land for wheat production was still higher than the maximum net revenue from wheat production after subsidies; since 2009, the maximum net revenue from wheat production after subsi-dies began to exceed the revenue from abandoning land for wheat production, indicating that, growing wheat is more economically rational than outbound working upon aban-doning farm land only since 2009 (Table 1, Fig. 5).

Table 1 The maximum net income from growing wheat and the revenue conversion margins between growing wheat and growing other

crops from 2003 to 2009 (Unit: yuan)

Year Cost Max wheatMax vegeta-

bleMax fruit Max forests

Max Wheat subsidies

Wheat-vegetable

Wheat-fruitWheat-forests

Earnings after giving up growing

wheat

2003 7 721 5 328 6 084 3 127 6 679 6 084 5 328 6 679 9 037

2004 7 779 6 806 7 032 7 818 12 578 8 216 8 216 8 216 12 578 9 557

2005 7 880 6 154 7 202 5 193 11 126 7 563 7 563 7 563 11 126 9 063

2006 7 786 6 042 6 899 7 226 10 442 7 452 7 452 7 452 10 442 9 127

2007 7 234 6 416 7 523 9 924 11 581 7 826 7 826 9 924 11 581 8 989

2008 6 891 6 622 7 159 16 696 38 388 8 031 8 031 16 696 38 388 8 612

2009 6 240 7 064 7 076 10 514 13 840 8 473 8 473 10 514 13 840 8 475

9000

8500

8000

7500

7000

6500

6000

5500

5000

Rev

enue

(yua

n)

2003 2004 2005 2006 2007 2008 2009Time (Year)

MAX wheat

MAX vegetable

MAX wheat subsidies

Wheat-vegetable

Fig. 2 Wheat-vegetable conversion margin

MAX wheat

MAX wheatsubsidies

MAX fruit

Wheat-fruit

18000

15000

12000

9000

6000

30002003 2004 2005 2006 2007 2008 2009

Time (Year)

Rev

enue

(yu

an)

Fig. 3 Wheat-fruit conversion margin


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5000

Rev

enue

(yua

n)

2003 2004

Time (Year)

15000

25000

35000

45000

2005 2006 2007 2008 2009

MAX wheat

MAX wheat

Wheat-forests

MAX forestssubsidies

Fig. 4 Wheat-forests conversion margin

Time (Year)

MAX wheat MAX wheat subsidiesRevenue from abandoning farm

2003 2004 2005 2006 2007 2008 2009

Rev

enue

(yua

n)

10000

9000

8000

7000

6000

5000

wheat-abandoning farm

Fig. 5 Wheat-abandoning fram conversion

From 2003 to 2009, at the total cost level of 6 063 yuan, 5 964 yuan, 6 233 yuan, 6 048 yuan, 5 941 yuan, 5 374 yuan, and 5 051 yuan respectively per hectare, conversion margins from corn to vegetable, to fruit, to forests, and the conversion marginal point from corn growing profit to non-farm employment earnings are separately shown in table 2, Fig.6 to Fig.9. From 2003 to 2009, because of the corn growing subsidies, the maxi-mum net income from growing corn was always higher than the maximum net income from growing vegetable; this indicated that corn growing was more profitable than vegetable growing (Table 2, Fig. 6). From 2003 to 2009, the maximum net income from growing corn was

also higher than that from growing fruit, compared with growing fruit, growing corn had more economic rational-ity (Table 2, Fig. 7). Except the year of 2003, although corn subsidies benefit food production farmers, the maxi-mum net income from forests was roundly higher than that from growing corn, and the gap between corn and forests is getting bigger ceaselessly. This indicated that it was more economically rational for farmers to transform growing corn to growing forests (Table 2, Fig. 8). From 2003 to 2009, no-farm employment income was lower than the income from growing corn, and this indicated that compared with non-farm employment income, grow-ing corn was more profitable (Table2, Fig. 9).

Table 2 The maximum net income from growing corn and the profits conversion margins between growing corn and growing other crops

from 2003 to 2009 (unit: yuan)

Year Cost Max cornMax vegeta-

bleMax fruit Max forests

Max corn subsidies

Corn-vege-table

Corn-fruit Corn-forests

Earnings after giving up growing

corn

2003 6 063 6 899 4 777 2 455 5 244 6 899 6 899 6 899 7 144

2004 5 964 7 777 5 392 5 994 9 644 7 927 7 927 7 927 9 644 7 927

2005 6 233 7 112 5 697 4 108 8 801 7 262 7 262 7 262 8 801 7 296

2006 6 048 7 348 5 358 5 612 8 110 7 498 7 498 7 498 8 110 7 498

2007 5 941 8 918 6 179 8 152 9 512 9 068 9 068 9 068 9 512 9 068

2008 5 374 8 453 5 584 13 021 29 939 8 603 8 603 13 021 29 939 8 603

2009 5 051 8 921 5 728 8 512 11 204 9 071 9 071 9 071 11 204 9 071

Note: The corn subsidies are only 150 yuan per hectare. Before and after subsides, the intensive marginal lines were approximate, so in figure 6 to figure 9, only the in-

tensive marginal lines after subsidies were marked.


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compared with growing wheat, it has no economic rational-ity any more that farmers abandon farming and leave home to work (Table 1, Fig. 5). Finally, the subsidies also make the maximum net income difference between growing wheat and growing wood reduced noticeably (Table 1, Fig. 4). The subsidies for growing corn are less, so the effect of corn sub-sides is not obvious enough (Table 2, Fig 6. 6-9).

But compared with growing forests, the compara-tive returns from growing wheat and corn are too less to change the tendency that farmers transform wheat and corn growing to forests growing. From 2004 to 2009, the sub-sidies respectively account for 24.4%、28.3%、32.1%、27.3%、4.4%、and 20.8% of the difference between the maximum net income from wheat (not including subsidies) and the wheat-forests transformation margin. And for corn subsidies, above kind of percentage is even lower. Taking

3.2 The influence of subsidies on conversion margin

The subsidies have no influence on the “Production Functions” , but can result in the displacement of intensive marginal line. According to the highest subsidies standard in 2009, the subsidies can make wheat intensive margin line move up by 1 409.55 yuan, can make corn intensive margin line move up by 150 yuan (Tables1, 2; Figs. 2-9).

Wheat subsidies have important influence on the con-version margin. Just because of the subsides, the conver-sion margin between wheat and vegetable is turned upside down(Table 1, Fig. 2), and the scissors difference of the con-version margin between wheat and fruit is postponed by 2 or 3 years, and the maximum net income difference between growing wheat and growing fruit is reduced remarkably (Table 1, Fig. 3). And just because of the subsidies existing,

Fig. 6 Corn-vegetable vonversion marginTime (Year)

Rev

enue

(yua

n)

10000

8000

6000

40002003 2004 2005 2006 2007 2008 2009

MAX comsubsidiesMAX vegetable

Com-vegetable

Fig. 7 Corn-fruit vonversion margin

Time (Year)

Rev

enue

(yua

n)

2000

6000

10000

14000

2003 2004 2005 2006 2007 2008 2009

Com-fruit

MAX fruit

MAX comsubsidies

Fig. 8 Corn-forests vonversion marginTime (Year)

Rev

enue

(yua

n)

35000

25000

15000

5000

2003 2004 2005 2006 2007 2008 2009

MAX comsubsidies

MAX forests

Com-forests

Fig. 9 Corn-abandoning farm conversion margin

Time (Year)

Rev

enue

(yua

n)

6000

7000

8000

9000

10000

2003 2004 2005 2006 2007 2008 2009

MAX comsubsidiesRevenue fromabandoning fram

Com-abandoningfarm


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the year of 2009 as the example, when the input of variable factors per unit wheat area was equal to 6 240 yuan, in or-der to make growing wheat is more economically rational than planting forests, the subsidies for wheat should reach the level of 6 780 yuan, and the difference between ex-pected subsidies and actual subsidies is 5 370 yuan; when the input of variable factors on unit corn area was equal to 5 055 yuan, in order to make growing corn more economi-cally rational than planting forests, the subsidies for corn should reach the level of 2 280 yuan, and the difference between expected subsidies and actual subsidies is 2 130 yuan. This sufficiently indicates that even measured with the highest subsidy standard in 2009, and the current subsi-dies are nowhere near enough.

4 Conclusions

Based on the investigation data on farmers in Shandong Province, this study analyzes on the conversion margins for the major uses of agricultural land in Shandong Province and their variations. The following main conclusions are obtained from the study.

(1) Except for 2003, farmer growing wheat is more eco-nomical and reasonable, compared with growing vegetable. Taking 2003 as the boundary line, the conversion margin between growing wheat and growing fruit has obvious scis-sors difference. From 2007, compared with growing wheat, famer growing fruit is more economical and reasonable. From 2003 to 2009, compared with planting forests, the eco-nomic rationality of growing wheat is getting smaller. Until 2009, compared with non-farm employment after abandon-ing farm, growing wheat has no economic rationality.

(2) From 2003 to 2009, growing corn is more economi-cal and reasonable, compared with growing corn, growing fruit, and engaging in non-farm employment, and growing corn is getting less economically and less reasonably day by day, compared with growing forests.

(3) Wheat subsidies make the conversion margin be-tween wheat and vegetable turn upside down; just because of the wheat subsidies, the scissors difference of the conver-sion margin between wheat and fruit is postponed for 2 or 3 years; the wheat subsidies makes non-farm employment after abandoning farm have no economic rationality any more; and the difference between the maximum net revenue from growing wheat and that from growing fruit is reduced remarkably, and the same thing happens to the difference

between the maximum net revenue from growing wheat and that from growing forests. But current subsidies are not enough to change the general tendency that farmers trans-form wheat land and corn land into forests land yet.

Foundation: The Important Project of Knowledge Innovation Engineer-ing of Chinese Academy of Sciences: the Pilot Project of Farmland-conservation and Modern Sustainable High Efficiency Agriculture; the Second Subject: the Regulation Mechanism for Requisition-compensation Balance of Cultivated Land and the Pilot Study on Productive Farmland Conservation in Yucheng, Shandong Province; the Seventh Special Topic: the Strategic Research on Farmland-conservation and Agriculture Sustain-able Development in Shandong Province.

References

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Liu C W, 2009. Study on the marginalization of arable land in China. Beijing: Science Press (in Chinese)

Liu C W, Li X B, 2005. The character and diagnostic criterion for marginisation of the arable land. Progress in Geography, 24 (2): 106 – 113 (in Chinese)

Liu C W, Li X B, 2006. Diagnosis on the marginalization of arable land use in China. Geographical Research, 25 (5): 895 – 904 (in Chinese)

Lin M X, 1993. Valuation of multiple objective grade urban land and best land use structure. Journal of Hengyang Normal University, (6): 20 – 26 (in Chinese)

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Tang X W, Mu Y P, Ma Y K, 2005. A further study of cost function under cob-douglas production function. Chinese Journal of Man-agement Science, 13 (4): 1 – 6 (in Chinese)

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William Alonso, 1964. Location and land use: Toward a general theo-ry of land rent. The President and Fellows of Harvard College


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conversion margins for the major uses of agricultural land and their variations in shandong...

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