Adoption patterns and productivity impacts of agricultural mechanization services

Abstract Agricultural mechanization services (AMS) have emerged as a viable and effective solution for helping farmers gain access to machinery equipment in developing countries. This study investigates the simultaneous decision‐making regarding multiple mechanization services and the causal impacts of the AMS on land productivity among Chinese smallholders. We find that: (i) The ratio of off‐farm wage to AMS price, or the wage‐rent ratio, has a significant positive effect on AMS adoption; the sequential adoption of AMS starts with power‐intensive followed by control‐intensive production tasks, (ii) Switching to AMS in plowing, transplanting, and harvesting increases rice yield by 48.0 kg, 23.7 kg, and 7.9 kg, respectively, and (iii) The AMS of pesticide spraying significantly decreases yield but the negative effect can be mitigated with professional service providers and effective labor monitoring, highlighting potential moral hazards associated with AMS when monitoring is costly. Simulation illustrates that increased AMS adoption can significantly enhance food security in China.