Substituting Organic Fertilizer for Chemical Fertilizer: Evidence from Apple Growers in China

Abstract

This study investigates the key factors affecting farmers’ decisions to use chemical fertilizer and/or organic fertilizer in Chinese apple production. This study calculates partial output elasticities and elasticities of the substitution between organic and chemical fertilizer, using a stochastic frontier production function model and data for 2017–2019. Subsequently, it analyzes how different sales channels impact the partial output elasticities of organic fertilizer. It also examines the impact of economic incentives on organic fertilizer use and technical inefficiency levels in apple production. The empirical results indicate that the organic matter in organic fertilizer has a medium level of substitutability with nitrogen, phosphorus, and potassium in chemical fertilizer. Further, the results indicate that an increase in the total number of available sales channels incentivizes farms to use more organic fertilizer to optimize apple quantity at the expense of the quality. Contrary, the use of any of the three most commonly used sales channels among apple growers (dealer door-to-door purchases, enterprise sales for juice pressing, and apple brokers) has the opposite effect on the use of organic fertilizer. From these findings, the subsidized provision of organic fertilizer and educating apple farmers about the economic and ecological benefits of sustainable land management measures are suggested. Finally, the study suggests measures to improve farmers’ income, sustainable land management, and lowering the footprint of chemical fertilizers in apple production in China.

Keywords

• chemical fertilizer
• input substitutability
• organic fertilizer
• sales channels
• stochastic frontier