Identifying entry points to improve fertilizer use efficiency in Taihu Basin, China

Overuse of fertilizers in China causes environmental problems and high costs for farmers. In this paper we aim to identify entry points to improve fertilizer use efficiency in Taihu Basin, China. We use stochastic frontier analysis to estimate the technical and fertilizer use efficiency of rice production based on a survey held among 320 households in Wuxi, Zhenjiang and Changzhou, located upstream of Taihu Lake. Subsequently, Tobit model is applied to analyze factors influencing fertilizer use efficiency. The average technical efficiency and fertilizer use efficiency in this area in 2008 were 84.2% and 25.4% respectively. On average, rice production is thus efficient, but fertilizer use efficiency can be substantially improved. The results of the regression analyses explaining fertilizer use efficiency indicate that although extension services have stimulated the use of formula fertilizer in Taihu Basin, the use of formula fertilizer has not (yet) improved fertilizer use efficiency. Environmental awareness on water pollution and on the effect of fertilizers, off-farm income and a positive risk attitude have a significant positive effect on fertilizer use efficiency in Taihu Basin. Possessing a car or truck, labor intensity and the occurrence of disasters, on the other hand, have a significant negative effect on fertilizer use efficiency. Policies aimed at improving fertilizer use efficiency may therefore focus on increasing knowledge on the environment and fertilizer management, improving extension services and encouraging farmers to migrate or work off-farm.

► Average technical efficiency of rice production in Taihu Basin is very high (84%), while fertilizer use efficiency (25%) is very low.
► Low fertilizer use efficiency is similar to other rice growing areas in China.
► Policies to increase fertilizer use efficiency should focus on increasing knowledge on the environment and fertilizer management, improving extension services and encouraging farmers to migrate or work off-farm.