The effects of off‐farm work on fertilizer and pesticide expenditures in China

• Published date: 01 May 2018
• DOI: http://doi.org/10.1111/rode.12354
• Author: Chunbo Ma,Wanglin Ma,Awudu Abdulai
• Date: 01 May 2018

REGULAR ARTICLE

The effects of off-farm work on fertilizer and

pesticide expenditures in China

Wanglin Ma

1

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Awudu Abdulai

2

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Chunbo Ma

3

1

Lincoln University, Christchurch, New

Zealand

2

University of Kiel, Kiel, Germany

3

Jinan University, Guangzhou, China,

and University of Western Australia,

Crawley, WA, Australia

Correspondence

Wanglin Ma, Department of Global Value

Chains and Trade, Faculty of

Agribusiness and Commerce, Lincoln

University, P.O. Box 85084, Lincoln

7647, New Zealand.

Email: wanglin.ma@lincoln.ac.nz

Abstract

This study examines the effects of participation in off-farm

work on farm expenditures on fertilizer and pesticide, using

farm household survey data from China. Simple mean

value comparisons reveal no statistically significant differ-

ences in fertilizer and pesticide expenditures between off-

farm work participants and nonparticipants. However,

econometric estimation with a treatment effects model

shows a negative selection bias. After controlling for this

bias, the empirical results show that participation in off-

farm work exerts a positive and statistically significant

impact on fertilizer and pesticide expenditures. Our find-

ings generally suggest that the income effect of off-farm

work stimulates agricultural production by increasing

investments in productivity-enhancing inputs.

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INTRODUCTION

Off-farm work by farmers has been a persistent phenomenon in most industrialized countries and

is increasingly significant in emerging economies such as China and India (Phimister & Roberts,

2006; Zhu & Luo, 2010). The socioeconomic and environmental impacts of off-farm work have

been widely analyzed in the empirical literature. In particular, a considerable number of studies

has examined the impact of off-farm work on farm productivity and efficiency, household income,

poverty reduction, food expenditures, and food security (e.g., Chang & Mishra, 2008; Mishra,

Mottaleb, & Mohanty, 2015; Owusu, Abdulai, & Abdul-Rahman, 2011; Wang, Wang, & Pan,

2011; Zhang, Su, Eriksson, & Liu, 2016; Zhu & Luo, 2010). Most researchers have found modest

positive impacts of off-farm work on these outcomes. In addition, some studies have attempted to

examine the impacts of off-farm work on the adoption of new agricultural technologies, invest-

ments, and input uses (Kousar & Abdulai, 2015; Mathenge, Smale, & Tschirley, 2015). However,

research in this area has so far been inconclusive, with alternative hypotheses being proposed.

DOI: 10.1111/rode.12354

Rev Dev Econ. 2018;22:573–591. wileyonlinelibrary.com/journal/rode ©2017 John Wiley & Sons Ltd

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On the one hand, some argue that a reduction in the time available for farm management owing

to increased off-farm work inhibits the adoption of time-intensive farming practices. As off-farm

work is often a response to improved work opportunities and wages, increased off-farm income

also provides cash for the purchase of productivity-enhancing inputs, especially for credit-con-

strained farmers (Matshe & Young, 2004; Taylor, Rozelle, & De Brauw, 2003). Moreover, reduced

labor supply to the farm may induce an input substitution effect. To maintain productivity, invest-

ments in nonlabor input uses may increase. Both hypotheses suggest a positive role of off-farm

work. On the other hand, a number of studies have found that off-farm work may have positive

environmental impacts owing to the changes in farming practice. For instance, Gedikoglu,

McCann, and Artz (2011) find that off-farm work has a positive impact on the adoption of capital-

intensive practices, such as injecting manure into the soil, a method used by farmers in Iowa and

Missouri. Chang and Mishra (2012) conclude that off-farm work of U.S. farm operators reduces

the intensity of fertilizer/chemical usage, which may contribute to the improvement of environmen-

tal quality. The studies on China by Feng, Heerink, Ruben, and Qu (2010) and Shi, Heerink, and

Qu (2011) note that local off-farm work tends to reduce the application of chemical inputs and

manure, which has a benign effect on environmental quality.

Still some other studies provide mixed evidence with regard to the impact of increased off-farm

work. Based on data from 2,419 farms in England and Wales, Phimister and Roberts (2006) find

that fertilizer intensity may decline as off-farm labor increases, while the use of environmentally

harmful crop protection increases as off-farm work increases. Evidence from Kenya, however,

shows that in less productive areas, off-farm work tends to reduce the likelihood that fertilizer is

applied, but when used, has a positive effect on quantity of fertilizer purchased (Mathenge et al.,

2015). More recently, Kousar and Abdulai (2015) show that participation in off-farm work tends

to increase the intensity of investment in long-term soil-improving measures such as organic man-

ure and green manure, but decrease the investment in chemical fertilizer in Pakistan.

In spite of the existing studies that explored the effects of off-farm work on the application of pro-

duction inputs, there is scanty evidence on the extent to which smallholder farmers in rural areas

adjust their use of agricultural inputs in response to the loss of labor resources. For many decades,

agriculture has been associated with production of essential food crops and rural household welfare.

Given that farm households may increase their labor supply to off-farm work to enhance agricultural

productivity through the income effect that supports investment in productivity-enhancing inputs,

studies that help understand the effect of off-farm work participation on agricultural investments

would definitely be useful to policy-makers in designing agri-environmental policies.

This paper contributes to the literature in threefold. First, we analyze the effects of off-farm

work participation on investment in productivity-enhancing inputs, focusing in particular on fertil-

izer and pesticide expenditures. To the extent that income from off-farm work participation can be

used to relax the budget constraints and therefore increase investment in farming by providing cap-

ital (Pfeiffer, L

opez-Feldman, & Taylor, 2009; Taylor et al., 2003), we assume that off-farm work

participation exerts a positive impact on the purchase of fertilizers and pesticides.

Second, we employ a treatment effects model to address the sample selection problem. Given that

farmers themselves choose to participate in off-farm work, their decisions to participate in off-farm

work and to invest in productivity-enhancing inputs such as fertilizers and pesticides may be influ-

enced by both observed household and farm-level characteristics (e.g., age, education, farm size, and

household size) and unobserved factors (e.g., farmers’innate abilities). Employing the usual ordinary

least squares (OLS) method to analyze the effect of off-farm work participation on fertilizer and pesti-

cide expenditures leads to sample selection bias. Although nonparametric methods such as propensity

score matching have previously been employed to analyze the effect of participation in off-farm work

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