Land Breeds Life: the Effect of Land rental on Farmers' Food expenditure

Land rental is regarded as an important tool to increase food productivity and improve farmers' livelihoods by policymakers in many countries. However, it is unclear whether changes in land, the most important production factor for food, will affect farmers' food expenditures. To better understand the relationship between land rental and farmers' food expenditure, based on the data from China Household Finance Survey (CHFS) 2013 and 2015, we employed the Difference in Difference (DID) and Propensity Score Matching (PSM) to estimate the effect of land rental (rent-in, rent-out) on farmers' food expenditure (purchase, self-sufficiency). The results show that the land rental increased farmers’ food expenditure by 7.05–8.22% and was mainly attributable to rent-in. The reason is that rent-in not only increases the economic income and food consumption demand of farmers, and then increases the expenditure on purchasing food, and also increases the expenditure on self-sufficient food by increasing the land. On the other hand, rent-out is due to the reduction of land, resulting in the reduction of self-sufficiency food, which is compensated by increasing the expenditure on purchasing food. Farmers in the western regions and with low living standards may suffer from land rent-out because they need to compensate for the reduced self-sufficiency food expenditure by raising more food purchases. These findings can provide evidence for land policies in the process of agricultural modernization and urbanization.