HOG PRODUCTION IN CHINA: TECHNOLOGICAL BIAS AND FACTOR DEMAND

China's agricultural output has expanded rapidly since the economic reforms of the late 1970s, reflecting both productivity growth and mobilization of inputs. Over the same period, increased consumption of livestock products has been a feature of China's food consumption. Widely different projections of China's demand for feedgrains to feed its expanding livestock sector have motivated this research. Productivity growth is an important component of such projections, but past estimates have been controversial, few focus on livestock, and we are aware of none that examine technological bias in China's livestock production. For example, does the nature of technical progress lead to increased or reduced use of feedgrains relative to other inputs? A feature of China's livestock sector is rapid structural change towards larger and more commercial and intensive production systems. As specialization has developed over the last two decades, the share of backyard livestock production has declined and the shares of specialized households and commercial enterprises have increased. We measure technological change and biases for each of these structures so that this information can be eventually combined with that on structural change when making feedgrain demand projections. Our commodity focus in this paper is on hog production, which is the major consumer of feedgrains in China. We use a translog cost function and adjusted livestock data to estimate technological change and biases. Technical change has not been neutral, and the bias towards feedgrain-saving was found to be statistically significant. We also find that the demand for feedgrains is elastic with respect to its own price and that strong substitution relationships exist with respect to some other inputs. Thus input price changes are important, along with technological biases, in changing the feedgrain input shares to hog production.