This article examines technical efficiency of the Chinese grain sector
using the framework of stochastic production frontier. The results reveal that: the
marginal products of labor and fertilizer are much smaller than that of land; human
capital and farm-level specialization have positive effect on efficiency, land
fragmentation is detrimental to efficiency, and elder farmers are as efficient as younger
farmers. We also examine the effects of size, mechanization and geographic location.
Simulation results show that significant output gains can be obtained by eliminating
land fragmentation, improving rural education and promoting specialization and
mechanization.