The Effect of Agriculture-Related Activities on Firm-Level Productivity of Japanese Rice Farmers(in Japanese)

Japanese farmers have been encouraged to diversify into agriculture-related activities, such as processing agricultural products and managing restaurants, in order to increase their income since the early 1990s. This paper examines the effect of agriculture-related activities on total factor productivity (TFP) levels and TFP growth among Japanese rice farmers. The analysis is based on data envelopment analysis scores and Malmquist productivity indices calculated from panel data for Japanese rice farmers (2004-08). The results indicate that, on average, farmers who undertake agriculture-related activities have higher TFP levels than those who do not. The results also identify the three key factors for determining the TFP differentials among the farmers: the proportion of the area used for planting rice in the total cultivated area, the labor to capital ratios, and the ratio of the expenditure on agriculture-related activities to agricultural expenditure. The higher these indicators, the higher TFP levels and growth rates the farmers tend to achieve. In addition, the results suggest that the share of female labor input in the total agricultural labor input has strongly positive effects on TFP growth in the case of farmers with agriculture-related activities. These findings imply that agriculture-related activities can be an effective measure to increase TFP and that the female workforce is a key contributor to TFP growth.