DO CHINESE FARMERS REINVEST IN GRAIN PRODUCTION

Grain production is affected by the relocation of farm household labou r from on-farm to off-farm activities, and by an increase in the inves tment in grain production as a result of increase in farm household in come that occurs along with such a labour shift. This study uses a rec ent farm household survey data to examine whether Chinese grain househ olds do reinvest in grain production. It has found that household inco me growth contributes to higher investment in grain production althoug h a higher share of non-agricultural income has a negative effect. The authors' other research has found a negligible direct impact of farm to non-farm labour transfer on grain production. We may conclude that in the near future, the total impact (direct and indirect) of labour t ransfer from farm to non-farm production on grain output is expected t o be positive. In the long run, in may become negative when more and m ore labour shifts out of grain production and marginal product of labo ur becomes positive.