Outsourcing Agricultural Production: Evidence from Rice Farmers in Zhejiang Province.

Abstract

China has recorded positive growth rates of grain production for the past eleven consecutive years. This is a remarkable accomplishment given that China's rapid industrialization and urbanization has led to a vast reduction of arable land and agricultural labor to non-agricultural sectors. While there are many factors contributing to this happy outcome, one potential contributing factor that has received increasing attention is the emergence of agricultural production outsourcing, a new rural institution that has emerged in recent years. This study aims to contribute to the limited but growing literature on agricultural production outsourcing in China. Specifically, this study analyzes factors affecting farmers' decisions to outsource any or some production tasks using data from rice farmers in Zhejiang province. Results from a logistic model show that farm size and government subsidy encourages farmers to outsource while ownership of agricultural machines and land fragmentation have negative effects on farmers' decisions to outsource production tasks. Results also showed that determinants of outsourcing decisions vary with the production tasks that farmers outsourced.