Self-Owned or Outsourced? The Impact of Farm Machinery Adoption Decisions on Chinese Farm Households’ Operating Income

Yuan Hu, Ziyang Zhou, Li Zhou and Caiming Liu ()
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Yuan Hu: College of Management, Sichuan Agricultural University, Chengdu 611130, China
Ziyang Zhou: College of Management, Sichuan Agricultural University, Chengdu 611130, China
Li Zhou: College of Management, Sichuan Agricultural University, Chengdu 611130, China
Caiming Liu: College of Management, Sichuan Agricultural University, Chengdu 611130, China

Agriculture, 2024, vol. 14, issue 11, 1-26

Abstract: Using farm machinery plays a significant role in easing the issue of slowing growth of operating income among farm households in China. Drawing data from CFPS2018, this study adopts a multinomial endogenous switching regression (MESR) to analyze the factors influencing farm households’ choices regarding self-owned farm machinery and outsourced machinery services, as well as their subsequent impact on operating income. The results of the study show that the characteristics of the head of household, family, village, and region have a significant impact on the farm households’ selection of whether to use self-owned machinery or outsourced services. Furthermore, the exclusive use of self-owned farm machinery and the combined use of both self-owned and outsourced machinery substantially enhance farm households’ operating income. An additional analysis indicates that these two types of machinery are complementary, and their combined use generates a superimposed effect that further boosts income. These findings suggest that the combined use of self-owned and outsourced machinery is optimal for farm households who wish to expand their operating income.

Keywords: self-owned farm machinery; outsourced machinery services; operating income; superimposed effect; multinomial endogenous switching regression (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2024
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