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Abstract In recent years, the sharp rise in agricultural production costs, particularly labor costs, has driven up a significant demand for labor-saving alternatives in China. This need is especially urgent given the ongoing aging of the agricultural workforce. For labor-intensive tasks in agriculture, mechanization appears to be a necessary response to the challenges posed by farming population aging (FPA). Agricultural mechanization services (AMS) are particularly appealing because they reduce the sunk costs associated with owning agricultural machinery for small farmers, thereby enhancing their access to such equipment. Moreover, AMS have a greater impact on improving agricultural productivity than self-owned machinery.
The central question is whether the FPA will inevitably increase farmers’ demand for AMS. Logically, FPA could either heighten farmers’ demand for labor-saving AMS or decrease their demand by altering their factor allocation decisions. To investigate into the relationship between FPA and AMS, this article undertakes two key tasks. First, using data from the 2017-2021 China Household Finance Survey, the instrumental variable method is employed to identify the impact of FPA on farmers’ adoption of AMS. Second, the study examines why the effect of FPA on AMS development shifts over time, focusing on labor opportunity costs and market-oriented land transfers.
The estimated results indicate that FPA significantly reduces both the adoption rate of AMS among farmers and the proportion of land area managed using AMS. Mechanism analysis reveals that rising opportunity costs of agricultural labor and the development of market-oriented land transfers exacerbate the inhibitory effect of FPA on AMS adoption. Further analysis suggests that improvements in the rural social security system and increased factor marketization intensify the negative correlation between FPA and AMS.
The contributions of this article are twofold. First, it is the first to explore the inherent logic of how FPA suppresses farmers’ adoption of AMS. Internationally, scholars have primarily focused on how factors such as AMS prices, rural-urban migration, opportunity costs of agricultural labor, and the aging rural population motivate farmers to adopt AMS. However, there has been little exploration into the alternative behavioral choices induced by FPA and their inhibitory effects on AMS adoption. Particularly in the context of global population aging and the intensification of FPA, the development of AMS plays a crucial role in maintaining sustainable agricultural development, ensuring food security, and improving labor productivity. Yet, the combined effects of global population aging and FPA could exacerbate food shortages in developing countries. Second, this article offers valuable insights for future policy-making related to the development of the AMS market and timely responses to changes in market demand. As the Chinese government focuses on promoting AMS development, the evolving characteristics and demands of AMS market participants will impose new requirements on market supply, playing a critical role in shaping the supply mechanisms of the AMS market.
The policy implications of this article are threefold. First, optimizing the implementation mechanisms of agricultural and operator subsidies is crucial to improving the labor productivity of active agricultural operators. Second, efforts should be made to accelerate the establishment of a reasonable land rent formation mechanism to prevent excessive marketization or inflated land transfer pricing, which could cause farmers to exit agricultural production prematurely and destabilize the AMS market and agricultural management system. Third, it is essential to expedite plans to enhance the quality of domestic agricultural machinery and establish regional multi-center specialized AMS organizations to mitigate the impacts of FPA.
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Published: 17 September 2024
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