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Economic Analysis of Farmers Decisionmaking on Agricultural Production Services——Taking Agricultural Machinery Operation Service as Example

【Authors】
ZHANG Zongyi, DU Zhixiong
【WorkUnit】
ZHANG Zongyi (Rural Development Institute of the Chinese Academy of Social Sciences, 100732;
Nanjing Research Institute for Agricultural Mechanization of Ministry of Agriculture, 210014)
DU Zhixiong (National Academy of Economic Strategy of the Chinese Academy of Social Sciences, 100028)
【Abstract】

While agricultural machinery operation service has become an important part of agricultural production services, which is an important link between the traditional small household farmers and modern agriculture, some key questions still lack systematic study: How do farmers make decisions to buy agricultural machinery or agricultural machinery services? How do farmers choose agricultural machines with different power? What impact does the agricultural machinery operation service market have on the purchasing decisions? What effect do subsidies have on farmers' decision-making? This paper analyzes the critical conditions of different decisions by constructing a cost model of different decision-making, and by using the data set of 2,397 family farms. The results showed that: (1) Farmer's decisions of buying agricultural machinery or agricultural machinery services or one specific kind of agricultural machine depend on the minimum value in the opportunity cost, the average use cost of different agricultural machines and the operating services market price. (2) Different agricultural machine has different economic operating range of land scale, and the value of the lower limit of the range will be higher if one agricultural machine is at a higher price and of higher efficiency. It is unreasonable to buy a machine beyond its economic operating range which is affected by the service market. The existence of the service market will push up the lower limit of the economic operating range of small farming machines with low value and low efficiency, and then small farming machines will be squeezed out of the service market. (3) Subsidies are not the panacea to promote agricultural production services, and improper subsidies will cause farmers to make incorrect decisions. Subsidies should be used only when the agricultural service market is in its early stage and of a low level.

JEL:Q12, Q13

【KeyWords】
Agricultural Production Services, Agricultural Machinery Operation Service, Purchase Decision