Small scale rubber farming and income risk in Xishuangbanna, China

Hermann Waibel, Shi Min

Institute of Development and Agricultural Economics, School of Economics and Management, Leibniz University Hannover

Jikun Huang

Center for Chinese Agricultural Policy, Chinese Academy of Sciences

Outline

1. Background

2. Objectives

3. Data

4. Results

5. Conclusions

Background

Conditions of Xishuangbanna Dai autonomous prefecture • Located in the southern of China, bordering Laos, Myanmar• 95% of area is mountain• Diversity of Ethnic Minorities

• Development of rubber economy• 1950-60s: Introduction of rubber• 1970-80s: Rubber expansion by state-own farms• Since 1990s: Expansion of rubber plantation by Small scale farmers

• Consequences of rubber for smallholders• Increase in household income and changes in livelihoods• Potential environmental and food security risks Current researches status• Most previous studies are qualitative analysis or smaller case studies• Poor representation of smallholder rubber farming in Xishuangbanna• Insufficient quantitative information on rubber farming (e.g. yield, input use)

Objectives

Survey and analyze the status quo of smallholder rubber farming• e.g. Land use, Input, Yield, Productivity, Revenue

Identify and discuss the critical values for rubber yield and price by breakeven analysis

Assess the contribution of rubber to household income

Explore the potential income riskiness of small rubber farmers using appropriate income diversification indices

Data

Baseline survey of SURUMER-SP9 on March 2013• Questionnaire design

Pre-survey: July 2012 Pre-test: December 2012

• SamplingStratified random sampling design(Based on population, rubber area and geographic location)8 townships; 42 villages

• Enumerators training5 days training:

3 days class room lectures and exercises 2 days field training

• Household survey Compensation 30 Yuan /per household 612 households Response rate 84 % (of sample drawn)

Results

Rubber farming • Land use for rubber farming

Categories Total land area Rubber land area Share of rubber land area

in total land areaPercent in total rubber

land(mu/person) (mu/person) (%)

All sample (612 households) 13.36 10.57 81% 100%

EthnicHan 10.46 6.47 75% 2.7%Dai 10.11 8.58 85% 47.5%

Hani 18.30 16.69 88% 17.7%Yi 24.04 15.63 69% 15.2%

Bulang 15.18 10.52 72% 8.5%Jinuo 18.20 14.84 79% 6.0%

Yao 15.91 10.16 58% 2.3%Others 5.29 4.33 82% 0.1%

Altitude

Altitude≤800 meters 12.74 10.53 85% 68.1%800<Altitude≤1000

meters 12.93 9.75 74% 27.0%

Altitude>1000 meters 35.39 21.81 62% 5.0%County

Menghai 10.71 7.46 77% 8.9%Jinghong 9.80 8.35 84% 36.6%

Mengla 18.23 14.12 79% 54.5%

Results

Contribution of rubber to household income by category

Categories Total net income

Yuan/person/yearRubber net incomeYuan/person/year

Percentage of rubber income in total

Total 16515.72 6842.24 41%Education of household head

0 year 14262.97 6692.15 47%1-6 years 15570.10 6985.37 45%

7- 16 years 21555.41 6729.40 31%Ethnic groups

Han 18150.01 3336.54 18%Dai 12845.30 7024.08 55%

Hani 22805.97 13372.22 59%Yi 22783.56 1179.63 5%

Bulang 16674.77 6493.13 39%Jinuo 39343.31 8791.59 22%

Yao 5313.97 -1228.05 -23%

Results

Contribution of rubber to households income by category

Categories Total net income

Yuan/person/yearRubber net incomeYuan/person/year

Percentage of rubber income in total

AltitudeAltitude≤800 meters 16890.27 8537.672 51%

800<Altitude≤1000 meters 12850.11 3768.178 29%Altitude>1000 meters 51437.13 -1812.035 -4%

County Menghai 10195.23 2686.73 26%Jinghong 14944.51 7177 48%

Mengla 20408.45 7869 39%

Results Cost of rubber farming input in 2012 (Yuan/mu)

Categories Total expensesExpense items

Fertilizer Pesticide Hiring laborAll samples (1667 plots) 164.72 134.90 24.87 4.94Education of household head

0 year 168.59 137.26 29.95 1.391-6 years 156.82 131.71 23.06 2.05

7- 16 years 177.60 139.05 22.24 16.31Ethnic groups

Han 262.56 220.64 34.99 6.93Dai 185.13 157.24 26.19 1.70

Hani 151.98 101.00 25.27 25.71Yi 89.28 70.28 16.25 2.74

Bulang 110.57 86.53 23.23 0.80Jinuo 126.28 96.92 22.31 7.04

Yao 106.34 90.36 15.98 0.00

Results Cost of rubber farming input in 2012 (Yuan/mu) cont.

Categories Total expensesExpense items

Fertilizer Pesticide Hired laborAltitude

Altitude≤800 meters 164.71 133.97 23.98 6.76800<Altitude≤1000 meters 170.43 141.68 27.83 0.92

altitude>1000 meters 98.16 81.64 15.20 1.33County

Menghai 169.16 141.08 26.51 1.57Jinghong 203.99 172.80 27.24 3.95

Mengla 118.56 89.70 21.62 7.23Harvest started

Yes 182.57 146.91 28.94 6.72No 146.51 122.65 20.72 3.13

Results Productivity and Revenue of rubber plantation in 2012 (Yuan/mu)

Categories Rubber cake Gross Revenue Net revenue

kg/mu Yuan/mu Yuan/muAll samples (842 harvested plots) 112.02 2341.30 2158.73Education of household head

0 year 126.28 2579.72 2383.421-6 years 109.40 2286.15 2114.28

7- 16 years 96.94 2118.48 1929.57Ethnic groups

Han 128.43 2011.68 1833.69Dai 113.13 2395.54 2197.85

Hani 105.00 2470.62 2294.80Yi 118.76 1929.84 1818.00

Bulang 95.76 2015.79 1945.95Jinuo 108.78 2072.36 1926.61

Yao 40.00 520.00 113.00

Results Productivity and Revenue of rubber plantation in 2012 (Yuan/mu) cont.

Categories Rubber cake Gross Revenue Net revenuekg/mu Yuan/mu Yuan/mu

Harvest phase 1-5 years 91.94 1788.59 1619.37

6-10 years 117.68 2527.47 2358.88More than 10 years 128.18 2760.83 2552.85

AltitudeAltitude≤800 meters 117.19 2536.95 2351.15

800<Altitude≤1000 meters 95.96 1716.16 1543.06altitude>1000 meters 43.33 1430.00 1346.00

County Menghai 82.11 2323.36 2106.61Jinghong 119.99 2480.51 2271.80

Mengla 107.95 2141.36 2005.94

Results

Breakeven analysis• Breakeven points - Formula of calculating the Breakeven points for each rubber plot( i ):

- Calculation results:

CountyBreakeven point (mean) Percent of below

Price (Yuan/kg) Yield (kg/mu)

Total samples 28.36 46.73 21.97%Menghai 55.08 66.24 31.65%Jinghong 35.80 56.06 27.31%Mengla 10.59 28.02 11.65%

Results • Distribution of distance between actual price and breakeven price Kernel density distribution Cumulative distribution

0.2

.4.6

.81

Tota

l

-400 -300 -200 -100 0 100Price_minus_Breakevenprice

0.0

1.0

2.0

3.0

4D

ensi

ty

-400 -300 -200 -100 0 100Price_minus_Breakevenprice

kernel = epanechnikov, bandwidth = 2.5700

Total samples

Results • Cumulative distribution of distance between price and breakeven price for the three

counties.0

.2.4

.6.8

1

-400 -300 -200 -100 0 100Price_minus_Breakevenprice

Menghai JinghongMengla

Results • Percent of Yield below Breakeven point by

harvest phase

• Percent of Yield below Breakeven point by

altitude

1-5 years 6-10 years More than 10 years

0%

5%

10%

15%

20%

25%

30%

26.89%

16.05%

21.77%

Altitude≤600

600<Altitude≤700

700<Altitude≤800

Altitude>800

0% 5% 10% 15% 20% 25% 30% 35%

15.64%

19.33%

26.09%

29.50%

Results

Income diversification • Sources of Income

• Income diversification index- Formula of Shannon equitability index for each household:

Where n denote the number of income source,; represents the ratio of income source i in total income.Shannon Equitability Index, which states the percentage of actual income diversification in relation to the

maximal possible diversity of income. The value of Shannon equitability index is nearer 1 indicating the more diversification of income and the less income riskiness

Categories Source IncomeYuan/person/year

Net IncomeYuan/person/year

Total sample 612 19530.71 16515.72Rubber 607 8477.80 6842.24Crops except rubber 403 4811.86 4164.83Livestock 111 1317.05 600.44Off farm Employment 143 1790.61 1790.61Self-employment 66 2070.30 2070.30Natural resource extraction 444 169.77 153.98Cash gift 213 623.05 623.05Public transfers 409 270.27 270.27

Results • Calculation results of Shannon Equitability Index- Average: 0.48

• Shannon Equitability Index by Ethnicity- Highest: Yao 0.69- Lowest: Bulang 0.39

Bulang Hani Total samples

Yi Han Dai Jinuo Yao0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.390.45 0.48 0.48 0.49 0.49

0.55

0.69

Results • Shannon Equitability Index by education level of household head

Categories SEI

AltitudeAltitude≤800 meters 0.45

800<Altitude≤1000 meters 0.57Altitude>1000 meters 0.27

County Menghai 0.51Jinghong 0.47

Mengla 0.49

Education of household head 0 year 1-6 years 7- 16 years

Shannon equitability index 0.47 0.49 0.49

Percent≤0.5 0.5<Percent≤0.8 0.8<Percent≤10

0.1

0.2

0.3

0.4

0.5

0.6

• SEI by share of rubber land in total • SEI by household location

Results • Effect of income diversification on rubber farming riskiness

- Index of income diversification : Shannon Equitability Index(SEI)

- Index of farming riskiness: For the plots which actual yield below breakeven points: Riskiness=|yield minus Breakeven yield|

Conclusions

Rubber has taken over the rural economy in Xishunangbanna and other parts of Southern China (81% of the total land is used for rubber cultivation) and poverty has been reduced in the area.

Land usage, Input, productivity and revenue of smallholders rubber farming differ among ethnic groups, locations and the characteristics of household head.

Over 40 % of household income is now from rubber farming Over 20% of rubber plots (in harvest phase) are below the breakeven point

indicating riskiness of rubber farming which is affected by ethnic groups, harvest phase and altitude.

Diversity in income sources is 0.48 low on average (SEI = 0.48) but varies by ethnic minority groups (Yao = 0.69) and (Bulang =0.39).

There is some notion of a kind of “optimal diversity” based on our simple risk measure.

Econometric analysis can provide more insights into the opportunities and risks of rubber farming.

Thanks for your attention!