Inefficiency in Rice Production and Land Use: A panel study of Japanese rice farmers

In this study, an empirical analysis was conducted on the behavior of Japanese rice producers from the standpoint of efficiency in production by using panel data from the Rice Production Cost Statistics by the Ministry of Agriculture, Forestry and Fisheries. The stochastic frontier production function, which comprises four production factors (land, labor, capital stock, and materials), was estimated and the inefficiency indices of production were calculated. Based on this information, the efficient and inefficient rice producers were identified, and the factor demand behavior and characteristics of the arable land utilization for rice production were compared. It was found that inefficient rice producers do not make any adjustments in employment in the short or long run, even if there is a change in the wages. In addition, it was observed that efficient rice producers who hold a large amount of the farms partitioned into small plots reduced the arable land utilization for rice production and increased productivity. However, it was noted that the certified farmers, who should be aiming at an expansion of the scale of operation and efficiency of agricultural operations, tend to reduce arable land utilization for rice cultivation and switch to other crops; moreover, the more efficient the certified farmers are, the larger are the effects of such activities.