Production Process Outsourcing, Farmers’ Operation Capability, and Income-Enhancing Effects

Production process outsourcing not only enhances farmers’ operation capability but also contributes to income growth. Utilizing field survey data from five provinces—Inner Mongolia, Gansu, Ningxia, Henan, and Shaanxi—this study employs an endogenous switching regression model to analyze the impact of production process outsourcing on the enhancement of farmers’ operation capability and the income-enhancing effect. The results reveal the following: (1) Production process outsourcing significantly improves farmers’ operation capability and increases income. (2) A higher degree of adoption of production process outsourcing correlates with greater improvements in farmers’ operation capability. (3) The impact of production process outsourcing on farmers’ operation capability varies with individual endowments; farmers with higher education levels, a larger number of laborers, and smaller planting areas experience more pronounced improvements in management capabilities when participating in outsourcing. (4) Production process outsourcing partially mediates the income-enhancing effect through its influence on farmers’ operation capability. To further promote income growth, it is essential to enhance the agricultural outsourcing market supply system, expand farmers’ access to production service information, and prioritize the development of farmers’ operation capability.