The Choice of Participation Forms in Community-Based Group Farming and Efficiency in Team Production

Past studies suggest that family farming is more productive than farming groups, but empirical studies are not enough to conclude which is more efficient. This paper tries to econometrically analyze the efficiency difference between farming groups and family farming, using original plot yield data from a district in Japan. We accomplish this by, first, analyzing the empirical determinants behind the farmers’ choice of participation forms in farming groups based on communities. Second, we verify the presence of free-riding at community-based farming groups which adopts an income-pooling system. Results of the regression analysis showed that for the choice of participation forms in farming groups the most important factor is family labor force. Estimating yield differences between farming group plots and family farming plots shows that farming groups is less efficient due to the incentive problem. Since the core problem of community-based farming groups seems to be the trade-off between efficiency and equity, even if farming groups yield level decreases, the adoption of commission paid according to each plot’s yield is not necessarily desirable. Therefore, a profit distribution mechanism in community-based farming groups should be designed, taking equity issues also into consideration.