Can whole steps of grain production be outsourced? Empirical analysis based on the three provinces of Jiangsu, Jilin, and Sichuan in China

Abstract

Certain outsourcing services for agricultural management in China, such as pest control in grain production, have experienced prolonged sluggishness, contrasting with the relatively high level of outsourcing services observed in harvesting, land preparation, and sowing. This study examines the feasibility of implementing whole-step outsourcing in grain production by conducting a case study of rice and maize production in Jiangsu, Jilin, and Sichuan provinces in China. The provision of outsourcing services hinges on two essential conditions: technological advancements fostering specialized production and economies of scale, coupled with a market size sufficient to realize the aforementioned potential economies of scale. The results showed that outsourcing pest control or harvesting services had varying economies of scale. The outsourcing services in pest control were less common than in harvesting services, and their marginal growth space of the economies of scale with technological change was also smaller. Determined by the operational characteristics of pest control itself, the market scale of its professional services is small. Therefore, achieving the whole-step outsourcing of grain production necessitates not only technological innovation but also effective policy interventions to overcome the constraints of market scale. Such interventions include (1) optimizing crop layouts between planning regions and reducing land fragmentation and (2) supplying timely and effective inter-regional agricultural information for service providers aided by information technology.

Keywords

• outsourcing services
• economy of scale
• technical conditions
• market scale