The impact of digital finance use on sustainable agricultural practices adoption among smallholder farmers: an evidence from rural China.

Abstract

Sustainable agricultural practices (SAPs) are conducive to increasing agricultural productivity and income while reducing resource and environmental stress. However, due to credit constraints in traditional financial markets, the adoption rate of SAPs remains low among smallholder farmers in rural China. Recently, the emergence of digital finance provides small farmers with a new way to obtain credit and alleviate their credit constraints, which may exert an impact on the adoption of SAPs. To verify this conjecture, this paper examines the impact and mechanism of digital finance use on SAPs adoption among smallholder farmers in China based on survey data collected from 903 apple growers. Empirical results showed that digital finance use significantly increases the number of SAPs adopted by smallholder farmers. Alleviating credit constraints, promoting information acquisition, and facilitating social interactions are the pathways through which digital finance use influences small farmers' SAPs adoption. Heterogeneity analysis showed that farmers with higher education level, smaller farming size, and who have received extension services adopt more SAPs with the use of digital finance. Therefore, it is suggested that the government should strengthen the construction of rural network infrastructure and provide training to promote smallholder farmers' access to digital financial services in a cost-effective and secure manner.