Enhancing Productivity on Dairy Farms in China: Taking the Cows to Town

Dairy farms in China’s suburban areas have been playing an important role in providing urban markets with fresh milk. With the construction of dairy cattle concentration centres and more cows being driven to the concentration centres, small and scattered dairy farms are gradually disappearing and more concentrated dairy cattle farming is being formed near suburban areas. This paper uses farm survey data and stochastic input distance functions to make estimates of total factor productivity (TFP) on suburban dairy farms, as well as for the entire dairy sector. The results show that over the past decade technical change and TFP growth have been positive on suburban dairy farms, but that on average such farms have been falling behind the advancing technical frontier. Further, the rate of technical change has been more rapid on suburban farms than for the dairy sector as a whole. The results suggest efforts to achieve a more even adoption of new technologies within the suburban dairy sector will further advance productivity growth in the sector.