Factors Affecting the Development of Land Rental Markets in China – A Case Study for Puding County, Guizhou Province

The development of land rental markets can enhance agricultural productivity and equity by facilitating transfers of land to more productive farmers and facilitating the participation in the non-farm economy of less productive farmers. In recent years there has been a rapid increase in the incidence of land rental activities in China. Large differences exist, however, both between regions and within regions in the share of households participating in land renting activities. The purpose of this study is to analyze the factors affecting the development of land rental markets in one of the poorest regions within China, namely Puding County in Guizhou Province. Data from 792 households in three villages are used to analyze the participation in land rental markets. For renting out of land, a binary probit model is used that corrects for missing observation caused by migrated households. We find that the land rental market is mainly driven by off-farm employment; land-labor ratios do not play a significant role in land renting out. Other important findings are that households belonging to minority groups are significantly more inactive in the land rental market, and that the age of the household head shows an inverted U-shaped relationship with land renting in. Participation in off-farm employment is relatively low in the research area. With further increases in off-farm work, the land rental market is expected to develop further. Households belonging to minority groups, however, are unlikely to participate much. Appropriate measures taken by local governments to stimulate land rental participation by minority groups can be an important way to stimulate agricultural productivity and total household incomes of such minority groups.