A farm household investigation carried out in Sichuan Province, China, shows that erch farmer's land holding in our sampled area is very small because of the equal allocation of callective-owned land with a view toward meeting farmer's subsistence requirements. Consequently, farmers with very tight land holdings are likely to earn their life depending mainly on wage working outside of farm, and to cultivated farmkand only by a way of self-providing of agricultural priducts. Clearly this pattern of land use is not desirable from the view of allocative efficiency. So how to facilitate the transfer of land from less-efficient to more-efficient uses become a crucial aspect of the problem of improving allocative efficiency under the land Tenancy System beginning in 1978 in China. Even tough some of farmers intend to sublease their land in or out optentially, they are usually discouraged because of the high transaction cists involving into land-renting market, and because most of farmers in our sampled area think of land as the most dependable social security system. So how to deal with those problems in still an important policy issue remained.
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