Abstract
Since China’s reform and opening-up in 1978, the income of rural residents has increased when compared with that of urban residents. However, the income growth rate of farmers is relatively low, and the income gap between urban and rural areas is widening. Using a sample of 1,325 large-scale farming households in Lin’an, this study constructs a theoretical path for how the level of vertical integration and an organization model affect farmers’ income levels and empirically tests the path using a mediation effect analysis model. The results indicate that organization models and vertical integration are important factors that affect farmers’ income levels. The total income and agricultural operation income of farmers who participate in agricultural operation organizations are greater than that of farmers who do not participate in an operation organization. In addition, the total income and agricultural operation income of farmers who produce and process and those who produce, process, and sell are higher than those of farmers who only produce. A farmers’ organization model has both a direct and an indirect positive influence on their income level, with the indirect positive influence coming through the mediating variable of vertical integration. The application of the organizational model can promote the growth of rural households’ total family income and agricultural income by 13.48% and 14.48% respectively, consisting of direct increases of 9.67% and 10.19%, and indirect increases of 3.81% and 4.29% through vertical integration. The results also show that access to credit, agricultural technology training, and the farmer’s education level have significant positive impacts on farming income levels. The findings suggest ways to increase farmers’ income by perfecting agricultural management organization systems, promoting agricultural industrialization, strengthening rural financial support, improving agricultural technical training for farmers, and increasing their level of education.
Highlights
Improving farmers’ income is the key to solving issues facing agriculture, rural areas, and farmers [1, 2]
The estimated coefficient shows that, when compared with farmers who did not participate in an operation organization, the total household income of farmers who participated in “professional association,” “farmer cooperative,” and “company + farmer cooperative + farmers” increased from 13.22% to 27.70%, while the increase in agricultural operation income ranged from 14.62% to 28.55%
Combined with the above model estimation results, this indicates that vertical integration plays a partial mediating role in the influence of the organization model on total household income and agricultural operation income, verifying hypothesis H2
Summary
Improving farmers’ income is the key to solving issues facing agriculture, rural areas, and farmers [1, 2]. As an organizational form of scale operations, such organizations can promote specialized agricultural production and, through the principle of reciprocal cooperation, increase peasant household income through capacity building of their members and division of labor within the organization [16, 17]. There are few empirical studies based on large samples of farmers, and the reliability of the research conclusions needs to be further verified To address these gaps, this study examines vertical integration, employs a mediation effect analysis model and empirically tests the influence of vertical integration on organization models and their impact on farmers’ income levels, so as to provide a beneficial reference to help increase farmers’ income
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