Induced Agricultural Production Organizations under the Transition of Rural Land Market: Evidence from China

This paper focuses on the impact of a new rural land reform, the Separation of Three Rights Reform, on changes in China’s agricultural production organizations. We illustrate the impact of market and nonmarket mechanisms on allocating agricultural production factors under the new rural land market transition through a land system and factor allocation model. Based on the expansion paths of different types of factors in the model, we classify the development of Chinese agricultural production entities into “extensional expansion,” “labor-intensive expansion,” “land-intensive expansion,” and “exit of agricultural production.” These agricultural production paths correspond to agricultural enterprises, family farms, agricultural cooperatives, and small farmers’ exit. Further, empirical and economic geography analysis results show that the interaction of market and nonmarket mechanisms is the main drive that induces the current diversified organizations in rural China. Thus, this paper provides a comprehensive explanation of changing patterns of an agricultural production organization under the transition of the rural land market.