Changing Structure and Sustainable Development for China's Hog Sector

Supply shortages and competitive disadvantages are the main problems faced by China's hog sector. The non-essential import of pork products, triggered by competitive disadvantages, poses great challenges to hog farms. Structural changes are an important policy concern in China and elsewhere. Previous literature has ignored whether the ongoing structural changes from backyard to large farms can contribute to sustainable development. This study adopts the micro-level data of hog farms collected from Jiangsu Province, and uses a two-step metafrontier model and a primal system approach. The empirical results reveal that the ongoing structural changes are capable of boosting the growth in output in China's hog sector, since the stronger increase in comparable technical efficiency compensates for the inappropriate technology. Furthermore, the ongoing structural changes are also beneficial in the reduction of production costs and in improving competitiveness in China's hog sector. The decline in technical and allocative inefficiency costs, particularly for technical inefficiency costs, contributes to the cost advantage with the increasing farm size.