Journal of Food, Agriculture & Environment, Vol.8 (2), April 2010 1185 www.world-food.net Journal of Food, Agriculture & Environment Vol.8 (2): 1185-1192. 2010 WFL Publisher Science and Technology Meri-Rastilantie 3 B, FI-00980 Helsinki, Finland e-mail: info@world-food.net Received 18 January 2010, accepted 3 April 2010. Assessing total factor productivity and efficiency change for farms participating in Grain for Green program in China: A case study from Ansai, Loess Plateau Li Li 1* , Atsushi Tsunekawa 1 , Mitsuru Tsubo 1 , Atsushi Koike 2 and Jijun Wang 3 1 Arid Land Research Center, Tottori University, 1390 Hamasaka, Tottori 680-0001, Japan. 2 Faculty of Engineering, Tottori University, 4-101 Koyama-Minami, Tottori 680-8550, Japan. 3 Institute of Soil and Water Conservation, Chinese Academy of Science, No. 26, Xinong Road, Yangling, Shaanxi 712100, China. *e-mail: lili@alrc.tottori-u.ac.jp, tsunekawa@alrc.tottori-u.ac.jp, tsubo@alrc.tottori-u.ac.jp, koike@sse.tottori-u.ac.jp, jjwang@ms.iswc.ac.cn Abstract In 1999, the Grain for Green program (also known as Sloping Land Conversion program), one of the world’s largest land-conservation programs, was launched in China. It emphasizes both eco-environment rehabilitation and poverty alleviation, with the ultimate goal of sustainable development. Total Factor Productivity (TFP) has important implications for conservation of the environment, enhancement of wellbeing, food self-sufficiency, and the sustainability of the program. Using data from the year before and the ending year of the first phase, we did a case study in the Zhifanggou watershed on China’s Loess Plateau. We used a Data-Envelopment-Analysis based on Malmquist TFP index approach to find out the changes of TFP, the sources of TFP growth, and the determinant factors at a farm level. We found that 1) TFP has been greatly improved after the implementation of the program and 2) the sole source of TFP growth is technological growth. In contrast, the technical efficiency of farms under the improved technology has decreased; 3) farms with an unfavorable initial state benefited more after the introduction of the program; and 4) land terracing and access to credit contributed significantly to TFP growth and technological growth. Land terracing is positively related to technical efficiency change, too. Extension services are positively related to technological growth, while age is negatively related to technical efficiency change. We therefore suggest a focus on terracing slopes, improving access to credit and extension services. Key words: Desertification, dryland, sustainable agriculture, Grain for Green program, total factor productivity, Malmquist TFP index, data envelopment analysis. Introduction Widespread land degradation and extreme poverty continued to be the most challenging problems threatening the sustainable development of rural China until the 1990s, despite decades of efforts by the Chinese government and local communities. The heavy, if not sole reliance of the huge rural population on limited natural resources that surpassed the carrying capacity of the ecosystem was the principal cause of resource depletion and impoverishment 1 . With the population explosion and fast economic development, last half century saw an accelerating trend toward land reclamation, overgrazing and deforestation on marginal land and sloping land, exacerbating land degradation. Lin and Ho 2 estimated that over 70 million hectares of barren land, pasture or forest was reclaimed up to 1996, mainly in low MCI (Multiple Cropping Index) provinces with fragile environments in the western interior and northern frontiers. On the Loess Plateau and the South- west Plateau, where erosion rate is the highest, degraded land accounted for 71.30% and 52.53%, respectively, of cultivated areas 3 . The serious land degradation not only greatly undermines land productivity and sticks farmers in poverty trap, but also has substantial off-site impact, such as increased incidence and severity of flooding and droughts, as a result of sediment deposition. Severe drought in 1997 and a devastating flood in 1998, which claimed thousands of lives and caused billions of yuan’s worth of damage, finally galvanized the Chinese government into action in 1999. A program called Grain for Green, also known as the Sloping Land Conversion program, was launched in Shaanxi, Sichuan and Gansu provinces, to prevent unsustainable agricultural practices. The program stresses both eco-environmental rehabilitation and poverty alleviation, with the ultimate goal of sustainable agricultural development. The key measure of the program is to compensate those volunteers who set aside steep cropland or low-yield marginal land for forest and grassland, or who retain and extend vegetation, with grain, cash or tree seedlings. Other measures include terracing for soil and water conservation, livelihood diversification to absorb surplus labor, rural energy construction, environmental resettlement, etc. (State Council of the P.R.C.). As the program gained acceptance in the pilot areas, the government expanded it to 17 provinces and districts in 2000, and to 25 provinces in 2002, totaling 1897 counties, more than 20 thousand towns and townships, more than 100 thousand villages, 73.91% of the national land, over 15 million rural households and more than 60 million farmers. The government declared their intention to convert 34 million mu (1mu = 0.067ha) of marginal cropland on steep hillsides and slopes, together with 39.93 million mu of rotational or waste land and mountains, to grassland and forests during the next 10 years (2002-2011). The total investment in the program will be 430 billion yuan 4 . Given the large operating scale, huge public investment and