Based on the principle of efficient spatial allocation of resource in resource economics, this paper builds a model to measure the efficiency of spatial allocation of farmland resource, and employs this model to test the efficiency of farmland allocation between 1989 and 2003. The result shows the inefficiency of spatial allocation during the farmland conversion process, and it also shows that if the farmland conversion quantity of the central and western China decreases 14.24% and 3.66% respectively, which means the quantity of eonversion transfer to the eastern China, it can leads to an optimal efficient of spatial allocation. The paper also points out that the transfer is a Pareto improvement, while not a Pareto optimal, for that spatial efficiency is only one aspects of an optimal allocation. So this paper draws the conclusion that the transfer of the farmland conversion permit is necessary, but not sufficient in the situation of excessive loss of farmland resource in current China.