Bamboo sector reforms and the local economy of Linan County, Zhejiang Province, People's Republic of China

Forest Policy and Economics 1 Ž
.
2000 283 299
Bamboo sector reforms and the local economy of Linan
County, Zhejiang Province, People’s Republic of China
Shashi KantU, Marian Chiu
Uni¨ersity of Toronto, 33 Willcocks Street, Toronto, Canada M5S 3B3
Received 30 August 1999; received in revised form 24 January 2000; accepted 15 May 2000
Abstract
The impact of county-level bamboo sector reforms on bamboo contributions to the county economy is examined by
using aggregate county data and simple analytical methods. The role of the contributions of bamboo to the different
income groups is evaluated on the basis of data, for 1987 and 1997, from 46 households and by using Gini
coefficients, relative and absolute inequality weights, and movements of households through different income groups.
Fresh bamboo shoot Ž
.
FBS production increased from US$0.1 million in 1983 to US$29 million in 1996. Allocation of
labor and capital reached near optimal by the end of the first phase of forestland reforms in 1987. Industrial reforms
could affect land allocation through price incentives. Market reforms had a much higher impact through price
incentives on land allocation. Bamboo contributions have benefited poor as well as rich groups, and these
contributions have moved many households from the poorer to the richer classes. Bamboo sector reforms have
reduced the inequality in bamboo land and bamboo income but the share of bamboo income in the total income
inequality has increased. The local governments should recognize these outcomes and the basic differences in the
production of different bamboo products to design future reforms.
2000 Elsevier Science B.V. All rights reserved.
Keywords: Income inequalities; Industrial reforms; Land reforms; Market reforms
1. Introduction
tion, industrial production, foreign capital invest-
ment, and markets. In this process, the Chinese
China, since 1978, has undergone drastic but
government has placed a special emphasis on the
gradual changes in policies related to land alloca-
forest sector. Many authors, such as Menzies and
Peluso Ž
.
1991 , Sun Ž
.
1992 , Yin Ž
.
1994 , Song et al.
Ž
.
1997 , Yin Ž
.
1998 have studied the broader as-
U
pects of the forest sector reforms. Ruiz-Perez et
Corresponding author. Tel.: q416-978-6196; fax: q416-
978-3834.
al. Ž1996,
.
1999 have studied the impacts of the
1
E-mail address: shashi.kant@utoronto.ca ŽS. Kant..
bamboo sector Ža part of the forest sector. re-
1389-9341r00r$ - see front matter
2000 Elsevier Science B.V. All rights reserved.
PII: S 1 3 8 9 - 9 3 4 1 Ž 0 0 . 0 0 0 2 1 - 6

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284
S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
forms on the economy of Anji county in Zhejiang
where the major share of bamboo contributions
province, and have provided many insights of
comes from fresh bamboo shoots Ž
.
FBS . Hence,
these reforms and their impacts at the county-level
the results of this paper will broaden the scope of
economy. However, many other issues still need
the research on the bamboo sector. The impact
to be addressed.
analysis of county-level reforms on local economy
First, Ruiz-Perez et al. Ž
.
1996 do not provide
is based on aggregate data of Linan County. The
specific features of bamboo Žor forest. land re-
study of the role of bamboo sector contributions
forms. Second, they discussed only the impact of
to the different income groups is based on two
country-level reforms on a county economy. Third,
data sets, for 1987 and 1997, from 46 households
they examined the impact of land reforms on
of five village groups. Hence, the scope of the
bamboo timber production, industrial reforms on
income distribution component of the study may
bamboo processing, and trade reforms on the
be limited.
export of bamboo products. We believe that the
Next, the methodology of data collection and
production of bamboo is influenced by all-land,
analysis is described. Second, background infor-
industrial and market-reforms. Fourth, Ruiz-Perez
mation on Linan County is given. Third, the main
et al. Ž
.
1999 found that bamboo had the higher
features of bamboo land reforms in Linan County
relative importance for middle-class farmers as
are discussed, and a brief overview of bamboo-re-
opposed to poor farmers. However, due to limita-
lated industrial and market reforms and extension
tions in the data, they were unable to analyse the
activities is presented. Fourth, impact analysis of
dynamics of the income contributed by different
bamboo sector reforms on local economy is pre-
sectors, and the movement of households through
sented. Fifth, the contributions of the bamboo
income groups. Hence, it is not clear whether the
sector to five income groups Žquintiles. and its
comparison of the contribution of bamboo to
impact on income inequalities are analyzed, and
different income groups at different times will
the results are compared with the study of Anji
really indicate the role of bamboo income to poor
county by Ruiz-Preez et al. Ž
.
1999 . Finally, sug-
households. Fifth, the findings of Ruiz-Perez et
gestions for future policy are discussed.
al. Ž1996,
.
1999 are based on data from Anji
County, where the major share of bamboo returns
comes from bamboo timber. In some other coun-
2. Methodology
ties, the major share comes from fresh or dried
bamboo shoots. Hence, the findings of Ruiz-Perez
Information on bamboo sector reforms was col-
and colleagues may not withstand the test of
lected through participatory discussions with rep-
universality.
resentatives from the local forestry bureau, forest
In this paper, we address these issues. The
college, local government, bamboo associations,
paper is focused on the impact of county-level
local bamboo-based industries, and farmers. An-
bamboo sector reforms on the contribution of the
nual reports and policy papers of the forestry
bamboo sector to the county economy; and the
bureau were examined. General economic and
role of the contributions of the bamboo sector to
forestry data, and data related to the production
different income groups. The first four issues
and prices of FBS, DBS, rice, silk, and tea, were
mentioned in the previous paragraph are ad-
collected from documentation from the forestry
dressed in the analysis of these two aspects. In
and statistical bureaus. A separate questionnaire
addition, the paper is based on Linan County
was used to collect quantity and price data of
inputs and outputs for each crop, and data were
collected from a minimum of five farmers and a
crop specialist, from the forest college, for each
1 In China, bamboo occupies 7 million ha Ž3.9 million ha
crop.
plantation and 3.2 million ha natural forests. which is more
than one-quarter of the world’s total bamboo area
In order to examine the role of bamboo sector
ŽZhong et
al.,
.
1997 .
contributions to different income groups, five vil-

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S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
285
lage groups, consisting of 46 households Žpopula-
A multi-pronged approach is used to evaluate
tion: 175 in
.
1997 under the same village govern-
the contribution of the bamboo sector returns to
ment, of Gaohong Township were chosen. House-
different income groups. The contribution of the
hold data on demographic variables, such as the
bamboo sector to household income is analyzed
number of workers, education level, gender dis-
for 2 years
1987 and 1997. First, village-level
tribution, and social and economic variables, such
aggregate changes in agricultural land, land under
as land holdings and the income contributions of
FBS, total income, per capita income, and bam-
primary, secondary, and tertiary sectors, were col-
boo contributions are examined. Second, inequal-
lected through a questionnaire wavailable in Kant
ities in the distribution of different resources
and Chiu Ž
.
1999 x survey. In 1987, a detailed social
such as land and labor, and inequalities in income
survey was conducted by Professor Zhou Guomo,
from primary, secondary, and tertiary sectors, and
Linan Forestry College, Linan in the same village.
components of primary sector
agriculture,
The 1987 survey included all the variables in-
bamboo, and animal husbandry
are examined
cluded in our survey and covered all the 46
by using the Gini coefficient.3 Third, income in-
households. Hence, 1987 data for these 46 house-
equality is decomposed by income sectors using
holds were collected from the data bank of Pro-
the relative and absolute inequality weights4 pro-
fessor Guomo Ž
.
1988 .
posed by Shorrocks Ž
.
1982 and used by Tsui Ž
.
1996 .
To analyze the impact of bamboo sector re-
Fourth, households are ranked in decreasing or-
forms, the trend of total contribution of the bam-
der of household income, and grouped in five
boo sector to the county GDP is examined over a
income groups Žquintiles., each contributing ap-
period from 1983 to 1996. To segregate the im-
proximately one-fifth of the total income. The
pact of three reforms
land, industrial, and
changes in the contributions of bamboo and other
market
the total period is divided in three
sectors to the income of different quintiles over a
periods
1983 to 1987, 1988 to 1990, and 1991
10-year period are examined. Fifth, the move-
to 1996 on the basis of the starting years of
ment of households from one quintile to another
different reforms. The comparative economic ad-
quintile and the role of bamboo income in this
vantage of FBS over other land-based products
movement are analyzed. Sixth, the contribution of
such as rice, tea, and silk cocoons is evaluated in
the terms of Benefit Cost
bamboo income to a group of 10 households, who
ŽB
.
C
ratios and
economic returns per unit of land area. The ef-
remained stationary in the poorest quintile over a
fects of different reforms on bamboo production
are decomposed by simple analytical analyses
based on the area, production, productivity, and
3
prices of products during the three periods.2
Gini coefficient ŽG. measures income inequality, and it
varies from 0 to 1. The value of G closer to 0 means less
inequality.
4Assume that there are M sectors, and K households. Let,
2 The results of segregation should be interpreted only as
Y is the total income of household I, and Y m is the income
i
i
indicators and not in absolute terms. As explained in Section
of household i from the mth sector. Hence, Y s M
Ý
Y m. The
i
1
i
5.2 and 5.3, various factors and their causal mechanisms work
decomposition determines the contribution of each sector to
simultaneously, and absolute separation is not possible in any
overall inequality IŽY . where Y sŽY , Y , . . . ..Y ., that is:
1
2
K
situation, and specifically in this case, due to limited data. In
IŽY . sS qS qS , where S is the absolute factor inequality
1
2
M
the present case, at least four mechanisms
long-term
weight measuring the absolute contribution of the ith sector
trends due to the pre-reform period, medium to long-term
to overall inequality. The relative factor inequality weight
effects of economic reforms, medium-term effects of incen-
measuring the proportion of the contribution of the sector, m,
tives and income elasticities, and short-term effects of price
to overall inter-household inequality is defined as s s ŽS rI ..
m
m
ratios of different crops
will work together. In addition, a
By requiring S
to satisfy certain desirable axioms, Shorrocks
m
time-series data on workforce in the bamboo sector was not
Ž
.
Ž
m
1982 has shown that s
can be estimated by s s cov Y ,
m
m
available which could have provided some other insights about
Y .rvar ŽY .. Hence, the relative factor inequality weight is the
the impact of bamboo sector reforms on local economy. ŽWe
same irrespective of the inequality index used. But the trend
are thankful to one of the reviewers for bringing out these
of S
is not necessarily the same as that of s
because S
m
m
m
.
points.
depends on both the movements of s
and IŽY ..
m

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286
S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
10-year period, is examined. Based on the out-
ernment continues to revise the existing forest-
comes, conclusions are drawn about bamboo con-
land tenure system to better meet the challenges
tributions to different income groups. The results
of efficiency and equity ŽWong Anguo, 1998, per-
are compared with the Anji county study by
sonal communication.. The forestland reforms re-
Ruiz-Perez et al. Ž
.
1999 .
sulted in the distribution of forestland under three
categories: individual use land, Farmers House-
hold Responsibility System Ž
.
HRS land, and con-
3. Linan County and bamboo
tract land. Individual use land is mainly to meet
basic subsistence needs of the household; dis-
Linan is one of 10 counties known as ‘bamboo
tribution of land is based on the total population
counties’ and is located in Zhejiang Province. The
of the household, and land is inheritable. The
county has a population of 504 254 people, 87%
land allocated to a household under HRS is pro-
of which are farmers, with 39 townships and 665
portional to the number of workers in the house-
villages. In 1996, the GDP per capita in Linan
hold. Contract land is distributed on the basis of
was US$1398 while that of China was US$497.
management capacity of a household. HRS and
Linan has a total area of 313 478 ha, of which
contract lands are allocated for 15 years. These
259 500 ha is forestland. The main bamboo
systems of land allocation are designed to balance
product of the county is fresh bamboo shoots
equity and efficiency ŽWong Anguo, 1998, perso-
Ž
.
FBS Žshoots of Phyllostachys praecox, common
nal communication.. The primary focus of indi-
local name Lei
.
bamboo . The two other products
vidual use land is on equity, HRS on equity cum
are dry bamboo shoots Ž
.
DBS Žshoots of Phyl-
efficiency, and contract land on efficiency. How-
lostachys dulcis, P. ¨i¨ax, P. glabrata and P.
ever, some equity mechanisms are built into the
pubescens. and bamboo timber from Moso bam-
contract system. Contract land is distributed using
boo (P.
)
pubescens . Bamboo shoots cover approxi-
methods of auction, rent, and the shareholding.
mately 47 000 ha, 15% of forest area, and 119 901
The main objective of the auction system is effi-
ha is timber forest ŽZhu, 1997,
.
p.176 .
ciency. But three mechanisms are built into the
auction system to ensure that large-scale disrup-
tions of equity do not occur. First, land area
4. Bamboo sector reforms in Linan County
allocated to an individual household must be less
than double the area available per household.
In the county, land reforms have been the same
Second, only 10% of land is made available for
for all forestland including bamboo land, but in-
auction. Third, lower quality land is auctioned
dustrial and market reforms of the bamboo sector
first. The rental system, in which rent is not due
have distinct features than that of other forest
until the fifth year, is designed to encourage par-
products. Hence, land reforms are discussed, in
ticipation of specialized but poor households. The
general, as forestland reforms, and industrial and
shareholding system is designed to pool scarce
market reforms are discussed specific to the bam-
resources from different partners, such as individ-
boo sector.
ual households, state-run enterprises, forestry
bureaus, township governments, and forestry col-
4.1. Land reforms
leges. In addition to these three forms of land
tenures, some state-owned farms and collective
In China, local level governments are semi-
farms also exist
autonomous, and have substantial autonomy in
However, these careful designs of forestland
developing local level policies. Hence, each county
reforms posed many problems. First, uncertainty,
has developed its forest land reforms within the
due to farmers’ lack of confidence in reforms and
broad national framework provided by the 1981
the short-duration of 15 years for land use rights,
National Forest Policy. Linan county initiated its
encouraged the large-scale harvesting of timber
forestland reforms in 1982, and the county gov-
and discouraged long-term investments in these

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S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
287
lands. Second, due to the heavy emphasis on
small-scale units by individuals, diversification and
equity, each site, such as the top, middle, and
introduction of new products, and sub-contracting
bottom of the hill, was divided equally among all
by industrial units.
households resulting in every household having
The prices of bamboo products were entirely
many small land plots and different households
controlled by the state and products were pur-
having management rights for different crops in
chased by State Marketing Cooperatives up until
the same plot. Third, informal nature of the con-
1987, but there was no quota for bamboo products.
tract between local government and farmers made
In 1987, the bamboo-sector market was opened
implementation difficult. Finally, absence of rent
for private enterprises and that increased pres-
for the land distributed under HRS constrained
sure on bamboo product prices, but prices were
the financial resources of local governments.
still determined by the state. In 1990, state price
In view of these problems, Hongqiao Township
control was removed, and prices became de-
began an experiment on forest tenures that was
termined by the market. The state even stopped
later emulated by the county government. Many
purchasing bamboo products. As a consequence,
changes, based on this experiment, have been
many township governments took initiatives to
made to forestland tenure system effective
facilitate the marketing of bamboo products by
September 1998. Some of these changes are the
local farmers that resulted in the establishment of
extension of the period of tenure to 50 years; the
10 bamboo markets in Linan County, and the
inheritance or transfer of land during the period
emergence of many local traders.
of contract; a chance to re-contract the land on
the expiry of contract; entitlement of 50% of the
profits to the old owner for the following 3 years
4.3. Extension acti¨ities and other factors
if the land is contracted to a new owner; a secu-
rity deposit to ensure forestry development on
newly acquired land; and, the entry of outsiders
The Association of Bamboo, established in
to contract land. However, the impact of these
1985, and the county forestry bureau organize
changes on bamboo production and local economy
extension activities. In the period of 1985 1988, a
cash incentive of US$545rha w
is beyond the scope of this paper.
300 yuanrmu; 15
mu s1 ha, and US$1s8.25 Chinese Yuan.x was
given to farmers for new bamboo plantation by
4.2. Industrial and market reforms
the county government. The high demand of fresh
bamboo shoots during the Spring Festival forced
the local researchers to work on a technology to
Bamboo-processing units, prior to 1987, were
get early shooting of bamboo shoots which is
owned and managed by county or township gov-
closely related to soil temperature, and begins
ernments. In 1987, the bamboo-processing sector
with a temperature of 9 10 C, normally in early
was opened to private entrepreneurs, and decen-
March. Local researchers found that covering the
tralized decision-making, at the level of township
land under Lei bamboo with bamboo leaves, rice
governments, resulted in different forms of bam-
or wheat straw, dried grasses, etc., promotes early
boo-based enterprises such as private enterprises
shooting by raising soil temperatures and in-
having management rights only, leasing the land
creases the productivity of the land. The details of
and equipment for the fixed period, and having
this covering technology
the best material to
shareholding arrangements with the government.
cover, thickness of covering layer, duration of
As an outcome of this process, out of a total of 11
covering, and time to begin covering
were
bamboo shoot processing units in the county, five
finalized and commercialized in 1990.
are private, four are collective, and two have
Hence, the total period of 1983 1996 has three
shareholding arrangements. Opening up of the
distinguished phases: first, 1983 1987
the pe-
sector also resulted in the establishment of
riod of land reforms and cash incentives, second,

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288
S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
1988 1990
the period of industrial reforms,
5.1. The comparati¨e economic ad¨antage of FBS
and third, 1991 1996 the period of market re-
production o¨er other land-based products and
forms and introduction of covering technology.
competition for land between these products
Extension activities have been ongoing through-
out 1983 1996.
The new role of bamboo in the local economy
is an outcome of the comparative economic posi-
tion of FBS with respect to other land-based
5. Bamboo sector reforms, bamboo production,
products, such as rice, tea, and silk. The constant
and the local economy
price indices Žbase year
.
1981 , area, and produc-
tion of FBS, DBS, rice, tea, and silk cocoon are
given in Figs. 1 3, respectively. The FBS prices
The bamboo sector reforms coupled with other
increased at a higher rate than increases in other
reforms have had a great impact on the local
product prices. The FBS price index in 1996 was
economy. In the county, the GDP per capita rose
1945.2 while the next highest price index was
from US$209 in 1985 to US$267 in 1991 and
446.0 of rice. The price index of FBS decreased
US$1398 in 1996. The average contribution of
slightly in 1990 and 1995, however, these declines
bamboo to farmers’ income rose from approxi-
were in real price terms. Current prices for 1990
mately one-tenth of total household income in
remained similar to 1989 prices but increased in
the early 1980s, to approximately one-third in
1995. In 1990, every product price dropped. For
1996. The major portion of the bamboo contribu-
tion comes from FBS. In the 10 townships in the
tea this decline continued up to 1991, and for silk
county, FBS contributed more than US$1.2 mil-
and rice, the decline continued until 1992. Prices
lionryear from 1995 to 1997. The value of FBS
of silk cocoon and FBS again declined in 1995
production
in
the
county
increased
from
and silk cocoon and DBS prices declined in 1996.
US$100 000 in 1983 to over US$2.55 million in
We believe that the relatively higher increase in
1987. FBS production increased to US$4 million
FBS prices is a result of many factors. First, FBS
in 1989 but dropped to US$3 million in 1990.
has shown the characteristics of a superior good,
However, in 1993, FBS production jumped to
at least among food items, resulting in increased
US$8.6 million. This significant increase contin-
demand for FBS as a result of economic growth.
ued in 1994, 1995 and 1996, with values of over
Second, proximity to large markets like Hangzou
US$12.12 million, US$18.18 million and US$29
and Shanghai provided an opportunity to Linan
million, respectively. DBS production values also
farmers to trade FBS to other regions of China.
experienced significant changes rising from
Third, complete withdrawal of state control, in
US$0.07 million to US$0.34 million in 1983,
1990, from FBS market allowed market interac-
US$0.63 million in 1989, and US$0.91 million in
tions between demand and supply to determine
1996.
prices. Fourth, the new covering technology Žex-
In 1997, the contribution of the bamboo sector
plained in Section
.
4.3 made fresh shoots avail-
to the county economy was US$61.21 million,
able during the Spring Festival, when consumers
which was comprised of US$40 million from bam-
are willing to pay high prices. The distinct con-
boo growing ŽUS$32.24 million from bamboo
tributions of these factors to the FBS price index
shoots and US$7.76 million from bamboo timber.
are observable during three periods. In the first
and US$21.21 million from bamboo processing
phase Ž1983
.
1987 , when only increased demand
ŽUS$10.55 million from shoots and US$10.66 mil-
was a factor, FBS price index increased from
lion from timber.. Hence, bamboo shoots consti-
129.7 to 227.5. In the second phase Ž1988
.
1990 ,
tuted approximately 71% of bamboo’s total con-
when increased demand and the widening of mar-
tribution to the economy of Linan county, of
kets Ždue to the entry of private enterprises. were
which 60% is from FBS.
present, FBS price index increased up to 516.6.

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S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
289
But, in the third phase, when all four factors were
increased yields of FBS put FBS in a comparative
present, price index has shown a drastic increase
economically advantageous position. The average
reaching 1945.2 in 1996. In the case of tea, DBS,
benefit-cost ratios5 and net financial returns per
rice, and silk, demand was not affected to the
hectare for different crops are given in Table 1.
same extent as that of FBS, and their pricing
FBS with covering technology has the BC ratio
mechanisms and market characteristics further
second to cocoon production, but net returns
put them in a disadvantageous position compared
from cocoon production are lower than that of
to FBS. Pricing mechanisms of these four products
FBS.
demonstrate a different mix of market and gov-
Rice, FBS, and mulberry plantations Žcocoon
ernment controls. Rice is under the quota system,
.
production are grown on good arable land while
and hence, there are quota prices and above-quota
DBS and tea on mountainous land. Hence, FBS
prices fixed by the state. Silk prices are totally
competes with rice and silk and DBS with tea for
controlled by the state and farmers can only sell
land resources. However, there may be a competi-
to the State Marketing Cooperatives. DBS and
tion between FBS and all other crops for labor
tea remained under state control up to 1990, and
and capital. Due to higher monetary returns from
post-1990, prices were determined by the market.
FBS compared to rice, the land competition
However, tea and DBS are mainly export products,
between these two crops resulted in a continuous
hence prices are dependent on world market
increase in land area under FBS. Fresh bamboo
prices. These factors contributed to substantially
shoots area reached 7333 ha in 1996 from 1867 ha
higher rates of price increases of FBS as com-
in 1983, and rice area decreased to 18 620 ha in
pared to other land-based products. The high
1993 from 30 640 ha in 1983. However, while
prices of output but the same prices of inputs and
there is no apparent competition between FBS
and silk, there is some competition between rice
and silk. The area under mulberry plantations
5 Farmers are mainly concerned about the current year’s
Žfor silkworm
.
fodder has increased from 1440
costs and returns. Hence, BC ratios and net returns are
hectares in 1983 to 2365 ha in 1994, but a de-
calculated for annual costs and returns. However, even for the
full rotation period of 20 years, the relative economic position
creasing trend in 1995 and 1996 reduced it to
of FBS with respect to other products does not change.
1826 ha. An interesting feature is that area under
Table 1
Benefit cost ratios and net financial returns per hectare for bamboo products and other land-based products
a
b
Products
Net financial returns
Benefit cost ratio Ž .
1
Benefit cost ratio Ž .
2
ŽUS$r
.
ha
FBS without covering
4273
2.4
2.0
technology
FBS with covering
13 164
3.6
3.3
technology
Silk cocoon
11 745
6.0
5.5
c
Rice
1736
2.0
Tea
1222
1.6
1.2
c
DBS
409
1.7
a Benefit Cost Ratio Ž .
1 : BC ratio Ž .
1 and net financial returns are for well-established plantations, normally older than 5 years.
In these calculations, establishment costs of these plantations are not included. In the case of tea and DBS, these costs are
irrelevant to farmers because they received established plantations from the collective. However, farmers do incur establishment
costs for FBS and Mulberry plantations.
b Benefit Cost ratio Ž .
2 : These are based on total inputs and outputs for a rotation period of 20 years Ždetails of calculation are
available in Kant and Chiu,
.
1999 .
c Not relevant.

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290
S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
Fig. 1. Price indices of fresh bamboo shoots, dry bamboo shoots, rice, tea, and silk cocoon for the Linan County, China.
Fig. 2. Land area under fresh bamboo shoots, dry bamboo shoots, rice, tea and mulberry plantations in the Linan County, China.

---

S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
291
Fig. 3. Production of fresh bamboo shoots, dry bamboo shoots, rice, tea, and silk cocoon in the Linan County, China.
rice decreased despite the increase in rice prices,
mand on the land resource is less. Third, almost
and area under FBS increased even during the
the entire family contributes to the process of
period when there was a decline in prices of FBS
silkworm rearing, and this allows various mem-
in 1990 and 1995. The main reason seems the
bers to sporadically divert their energy to other
comparative advantage of FBS over rice, and,
tasks. Fourth, cocoon production is a specialized
hence, even a small decrease in FBS prices could
job, and families who have engaged in silk pro-
not deter local farmers from converting more
duction for long time are restrained by cultural
area to FBS growing. In addition, the passive
inertia to give up their silk production activities.
approach of local governments, due to rice quotas
Hence, area under bamboo plantations for FBS
being low compared to rice production, towards
as well as for mulberry plantations increased at
conversion of agricultural land to bamboo pro-
the cost of area under rice.
duction is also an important factor to increases in
FBS area. However, the significantly higher price
5.2. Bamboo sector reforms, FBS production, and
index of FBS Ž3 4 times. does not pose a problem
resource allocation
to area under mulberry plantations that is at-
tributable to four factors. First, the financial re-
The land area, production, and productivity of
turns per unit of land area from FBS and silk are
FBS indicate marked differences during the three
not much different even after the introduction of
periods of 1983 1987, 1988 1990, and 1991 1996.
the new covering technology, and returns from
The area under FBS increased at a rate of 216,
FBS without the covering technology are less
422, and 555 haryear, respectively, during these
than half of the returns from silk. At the same
three periods. These different rates of increase
time, BC ratio of silk cocoon is higher than that
indicate that the economic incentives, due to
of FBS. Second, cocoon production is more
residual income, created by the HRS, as well as
labor-intensive compared to FBS, and hence, de-
the economic incentives created by industrial re-

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292
S. Kant, M. Chiu r Forest Policy and Economics 1 (
)
2000 283 299
forms and market reforms, have different impacts
The real effect of reforms on the local economy
on the area under FBS. As mentioned above, FBS
is reflected in the production of crops. FBS pro-
prices were state-controlled until 1987. In 1987,
duction increased continuously from 1420 t in
opening of the bamboo-based processing sector to
1983 to 44 799 t in 1996. The production of rice is
private enterprises increased demand for FBS,
cyclical, showing peaks of 168 235 t in 1984,
and thus, despite prices remaining under state
145 730 t in 1991, and 145 721 t in 1994, and
control, there is a marked difference in the in-
troughs of 139 818 t in 1989, and 142 260 t in
crease in prices in 1988 and 1989 as compared to
1993. However, the rice production level of 1984
the previous years. Hence, increased demand and
was never regained. The production of silk has
higher prices created economic incentives for the
increased continuously from 886 t in 1983 to 3386
farmers to bring their land under FBS cultivation.
t in 1994, and decreased to 2171 t in 1996. In the
After 1990, when the state withdrew from the
production process, resource allocation is an im-
bamboo market, prices jumped by US$0.36 Ž3
portant factor, and land productivity Žproduction
yuan.rkg in 1 year, and a similar trend continued
per unit land area and not the productive capac-
in later years, thus reinforcing the price incen-
ity. can provide some indications of resource allo-
tives to farmers. Following McMillan et al. Ž
.
1989 ,
cation. The productivity of rice increased from
we could be inclined to say that an annual in-
5.07 to 7.64 trha in 1993, and then slightly
crease of 216 ha of FBS area is attributable to
dropped to 7.08 trha in 1996. The productivity of
economic incentives due to the HRS, and 206 ha
silk cocoon has almost continuously increased
and 319 ha to price incentives during 1988 1990
from 0.61 to 1.43 trha in 1994 and then dropped
and 1991 1996, respectively. However, in the first
to 1.19 trha in 1996. These increases in produc-
period Ž1983
.
1987 , economic incentives due to
tivity indicate continuous improvement in re-
HRS and cash incentives worked together. In the
source-use by farmers. In the case of rice, farmers
last period Ž1991
.
1996 , price incentives due to
diverted approximately one-third of their land to
market reforms and economic incentives due to
other economically better uses, and allocated
new technology acted together. In addition, ex-
other resources, such as labor and capital, more
tension activities contributed throughout the
efficiently. The case of silk supports the hypothe-
whole period. Similarly, an assumption, similar to
sis that even in the situation of a totally state-con-
McMillan et al. Ž
.
1989 , that economic incentives
trolled product market, agents can use their pro-
due to the HRS would be exhausted by the end of
duction factors efficiently. The productivity of silk
1987 would be unrealistic Hence, with the given
cocoon production is dependent upon the produc-
data, it is not possible to separate out the effects
tivity of mulberry plantations with respect to leaf
of each reform and incentive. We, based upon
production, as well as to the cocoon rearing
our discussions with forestry bureau officials, in-
process. Hence, we attribute a major portion of
tend to conclude that during the 1983 1987 pe-
efficient production to efficient labor use. There-
riod, increases in FBS area were due to economic
fore, the increase in productivity of silk is an
incentives from the HRS and cash incentives.
indication that people are efficiently organizing
During the period of 1988 1990, the HRS and
their labor resources after the implementation of
price effect contributed almost equally, and that
the HRS.
during the 1991 1996 period, the contribution of
During the period of 1983 1987, FBS produc-
the price effect, coupled with new technology,
tion increased at a rate of approximately 3887
and HRS were approximately 60 and 40%, re-
tryear, and land productivity7 increased from 761
spectively.6
to 8675 kgrha. Hence, the efficient use of all
inputs, not only increased amount of land, but
contributed to the increased production. In the
6Assuming that due to the continuous changes in land
3-year period between 1988 and 1990, FBS pro-
tenures, the annual contribution of the HRS incentives to
increased FBS area remained the same over the total period
duction increased at a slower rate of 1667 tryear
Ž1983
.
1996 .
in 1988 and 1989, and in 1990, production de-

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