How Farmers Make Investment Decisions: Evidence from a Farmer Survey in China

Shuangjin Wang, Yuan Tian, Xiaowei Liu and Maggie Foley
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Shuangjin Wang: School of Management, Tianjin University of Commerce, Tianjin 300134, China
Yuan Tian: School of Economics and Management, Beijing Jiaotong University, Beijing 100044, China
Xiaowei Liu: College of Business, St. Ambrose University, Davenport, IA 52803, USA
Maggie Foley: Davis Business School, Jacksonville University, Jacksonville, FL 32211, USA

Sustainability, 2019, vol. 12, issue 1, 1-19

Abstract: Based on the grain production data hand collected in Mid-East China, a multinomial Logit model was employed to analyze factors that are critical to farmers’ investment decisions in food production. Reasonable explanations are provided to help understand differences between expected farmers’ investments in grain production and the actual results. It was found that the cost of machinery and the number of farmers is key factors affecting farmers’ willingness to adjust investment. Further research shows that most of the farmers who had the willingness to adjust investment did not implement the adjustments in the short-term. From the micro-adaptability expectation perspective, the time that it takes to adjust the planting area could explain farmers’ investment adjustment intention and the behavior. From the macro-investment perspective, short-term output elasticity of physical capital is less than long-term output elasticity. The differences between farmers’ willingness to invest and the actual results are therefore generated. These findings suggest that it is necessary to strengthen the application of big data technology in agriculture in order to improve the platforms’ efficiency in data releasing and reaching out to farmers to provide more accurate advice regarding investment adjustment.

Keywords: grain farmers; willingness to adjust investment; multinomial Logit model (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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