The reduction of cotton cultivation in Shandong Province of China: Does off-farm employment matter?

The purpose of this paper is to explore the potential causes of the reduction of cotton cultivation in Shandong Province of China from the perspective of smallholders and notably examine the role of off-farm employment.

This paper extends an integrated behavioral model to analyze the relationship between off-farm employment and cotton cultivation by taking into account farmers’ risk attitudes. A household survey data of 144 Bt cotton farmers in six villages in Linqing County, Shandong Province conducted in 2012 and 2013 is used. A simultaneous equations model is established and further estimated by using three-stage least squares method.

Although the introduction of Bt cotton has promoted the increase in cotton acreage in China from 1999 to 2007, the planting area of cotton has been decreasing since 2007. The results show the significant correlations among risk attitude, off-farm employment, and cotton cultivation. The planting area of cotton is positively correlated with farmers’ willingness to take risk but negatively associated with off-farm employment of family members. The findings imply that the rapid emergence of off-farm labor markets is a major reason for the reduction of cotton acreage in Shandong Province. In the context of the more opportunities of off-farm employment in China, cotton acreage is expected to decrease further.

The findings provide a reasonable explanation for the reduction of cotton cultivation in Shandong. This analysis contributes to a better understanding of the relationships among individual risk attitude, off-farm employment, and agricultural behavior, thereby adding to the literature about the application of the integrated behavioral model.