Effect of agricultural subsidies on heterogeneous farmers’ fertilizer application intensity and its mediating mechanism: Based on China household finance survey database

Abstract

Agricultural subsidies have an important effect on the farmer’s fertilizer application behavior, but the differences in the effect on different farmers and its mediating mechanism have not been sufficiently studied. Using relevant data from the CFHS database in 2015, this paper focused on the differences in the effect of agricultural subsidies on fertilizer application intensity among farmers with different operation scales and planting structures, as well as the mediating mechanism of the effect of agricultural subsidies on farmers’ fertilizer application intensity. It was found that agricultural subsidies in general helped farmers reduce fertilizer application. This finding still held after replacing the explanatory variables. However, the effect of agricultural subsidies on fertilizer application intensity varied significantly across farmers with different operation scales and planting structures. The fertilizer reduction effect of agricultural subsidies was weakened by the increase in the operation scale and the share of food crop cultivation, i.e., the fertilizer reduction effect of agricultural subsidies on smaller farmers and cash crop cultivation was greater relative to larger farmers and food crop cultivation. Farmers’ operation scale, planting structure and farm machinery inputs are important mediating variables of the effect of agricultural subsidies on farmers’ fertilizer application intensity. The agricultural subsidies played a role in reducing fertilizer application intensity by encouraging farmers to expand their operation scale and increase food crop cultivation, and increased fertilizer application intensity by incentivizing farmers to purchase farm machinery and adopt mechanical farming. Finally, some suggestions were put forward to play the fertilizer reduction effect of agricultural subsidies based on the findings of the study.

The Carbon Emissions Reduction Effect of Green Agricultural Subsidy Policy: A Quasi-Natural Experiment

“…GASP allocates 20% of subsidy funds to encouraging farmers to adopt green, low-carbon practices. Farmers who receive subsidies have more funds available to adopt conservation farming patterns, such as replacing chemical fertilizers with organic fertilizers and adopting agro-film recycling projects (He et al, 2022) [29]. Third, GASP reduces ACEs by improving the environmental awareness of farmers.…”

Do Farm Subsidies Effectively Increase Grain Production? Evidence from Major Grain-Producing Regions of China

“…As we all know, agricultural subsidies can cover part of the expense of rural households in major producing areas. The increase in the budget for fertilizer and pesticides will result in changes in households’ usage patterns [ 21 , 42 , 78 , 79 ]. Without subsidies, the rural households that produce grain have to pay for the expense of fertilizer and pesticides.…”

“…Regarding fertilizer application, Kugbadzor [ 39 ] evaluated the influence of the Fertilizer Subsidy Program (FSP) on agricultural output in Ghana. The results indicated that the national output elasticity increased when the FSP was implemented [ 42 ]. The study indicated that agricultural subsidies helped rural households minimize their use of fertilizer [ 43 ].…”

Assessing the impact of China's agricultural subsidy reform on fertilizer management: a county-level empirical analysis based on difference-in-difference model

“…However, the other strand of the literature held the opposite point of view. He et al (2022) found that believed that agricultural subsidies for improved crop strains and seeds, the direct subsidy for grain growers, and the comprehensive subsidy for agricultural material increased farmers' fertilizer application. The third group analyzes the impacts of agricultural subsidies on the usage of fertilizer in terms of theory.…”