Abstract

The Taiwanese government introduced specialized rice production and marketing zones (SRPMZs) in 2005 as part of the structural adjustment of the rice industry. This study shows the effect of SRPMZ on leased farmland and custom farming and clarifies the role of the policy of supporting group farming operations in achieving farmland consolidation. This study uses the difference-in-differences method with and without covariates to estimate the effects of SRPMZ policy in Taiwan. This study analyzes the effect of the SRPMZ designation on the areas of leased and custom farming farmland at the village level. This study used village-level data from Taiwan’s Censuses of Agriculture from 2000 to 2015. We find that SRPMZ designation increases the area of leased farmland per village by 13.5 ha and decreases the area with custom farming by 4.86 ha when we apply difference-in-differences methods with time-varying covariates. This is the effect of farmers choosing to lease their farmland through SRPMZ instead of custom farming. While several studies discuss the SRPMZ policy, focusing on farmer productivity or SRPMZ operator efficiency, few studies have analyzed the impact of the SRPMZ policy on farmland use. The results indicate that the policy of supporting group farming operations, coupled with farmland leasing, can promote farmland consolidation and improve the agricultural structure.