What are the effects of participation in production outsourcing? Evidence from Chinese apple farmers

Abstract

Outsourcing, as a productive service, has been widely adopted in industrial production and international trade but less applied in agricultural management. With the advancement of agricultural labor division and specialization, outsourcing is becoming one of the most sustained trends in concurrent business. This study used a multiple linear regression and a propensity score matching model to quantify the different effects of participation in production outsourcing on farmers' apple production efficiency and apple income based on field survey data from 960 apple farmers in the Shandong, Shaanxi, and Gansu Provinces. The results showed that, on average, the outsourcing of apple production increased farmers' apple production technology efficiency by 5.60%, their labor productivity by 2121.48 kg/person, land productivity by 334.50 kg/mu, capital productivity by 0.05 kg/Yuan, and apple sales revenue by 13,300 Yuan. However, farmers' net income from apples decreased by an average of 5000 Yuan. The outsourcing of apple production, which is labor-intensive, is constrained by the increase in labor costs, which, in turn, affect the transformation of the apple industry into a service-scale operation driven by the economy of division.