1. Hitotsubashi-RIETI International Workshop
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.
The purpose of 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. Average Costs by land size (per 60 kg of rice production)
5,000
10,000
15,000
20,000
25,000
30,000 2 4 6 8 10 12
（Yen）
less than 0.5ha
0.5 ～
1ha 1
2ha
3ha 3
5ha 5
7ha 7
10ha
15ha （ ha ）
Average income 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
Total Cultivated area
(thou. hectares)
Number of rural communities
Number of rice crop farmers
Number of farmers with income from rice sales
Avg. number of rice farmers in a community
Averages for Rice Farming
Cultivated area
(ares)
In-house labor hrs.
(person, day)
Agricultural machinery cost (\ ten thousand)
42 prefectures
1,449.4
116,859
1,912,925
1,648,311
16.4
75.8
206.4
395.3

4. Frequency on Sizes Data: Census of Agriculture and Forestry 201020 40 60 50
100
150
200
2,500
5,000
7,500
10,000
12,500
15,000
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., from Arahata, 2010)
The paper opens up many interesting policy questions to ask on the effectiveness of agricultural policies.