Determinants and impacts of outsourcing pest and disease management

Abstract

PurposeThe purpose of this paper is to investigate the determinants and impacts of outsourcing pest and disease management on rice production in China.Design/methodology/approachA multinomial endogenous treatment effects model which accounts for selection bias was used.FindingsThe results show that outsourcing decisions are driven mainly by the size of the farm, the age of the household head and other household characteristics. Further, the authors find that outsourcing labor for pest and disease control has no significant effect on pest control cost and rice yields, though it reduces the number of pesticide applications. Conversely, outsourcing of professional services can increase rice yields by 4.1 percent, and at the same time it increases pest and disease control costs by 50.6 percent. However, it is found that outsourcing of professional services exerts no significant impact on the farm profitability.Practical implicationsThis study suggests that households with large farm size are more likely to outsource professional services and, therefore, service providers and governments should target those farmers to provide incentives and create greater awareness of the benefits from the outsourcing of professional services. Moreover, the increase in yields along with the government subsidy justifies the outsourcing of professional services by farmers. However, service providers and policy makers have a lot of leeway to come up with cheaper methods for pest and disease management in rice production.Originality/valueThis study is the first attempt to simultaneously evaluate the determinants and impacts of outsourcing pest and disease management on rice production in China.