Research on the Impact of Agricultural Production Outsourcing on Farmers’ Fertilizer Application Intensity: An Inverse U-Shaped Relationship

Abstract

Agricultural production outsourcing services encourage a shift in the way crops are grown in developing countries and make it easier for small farmers to join the social division of labor in agriculture. This makes production more efficient and has a big effect on the inputs used in agriculture, especially fertilizer. This paper empirically tests the impact of production outsourcing on farmers’ fertilizer intensity using the instrumental variables method with non-planar panel data from the 2020–2022 China Land Economy Survey (CLES) of farm plots. The results showed that there was a significant inverted U-shaped relationship between the degree of agricultural production outsourcing and the intensity of fertilization on farmers’ plots. Mechanistic analysis shows that agricultural production outsourcing affects the fertilizer intensity by changing the labor allocation of farmers. Especially as the degree of agricultural production outsourcing increases, the intensity of farm labor inputs by farmers gradually decreases, and the impact of fertilizer intensity on the plots showed a tendency to be promoted first and then suppressed. The moderating effect showed that plot size was a major moderating factor. This means that the bigger the plot, the flatter the inverted U-shaped curve became, and the same level of outsourcing could lead to less fertilizer application. This happened by moving the inflection point of the inverted U-shaped curve to the left, which stopped the fertilizer application at a lower level of outsourcing. Heterogeneity analysis showed that participation in technology-intensive production outsourcing was beneficial in terms of reducing fertilizer intensity, and that an increased degree of agriculture production outsourcing was beneficial for farmers with large plot sizes and younger heads of household.