Outsourcing of Agricultural Machinery Operation Services and the Sustainability of Farmland Transfer Market: Promoting or Inhibiting?

The agricultural machinery operation services (AMOS) market and the farmland transfer market are regarded by policymakers as complementary goals for promoting agricultural development in China. Nonetheless, the farmland transfer market in China is confronted with the threat of sustainable development. The relationship between AMOS and farmland transfer is not always complementary. To analyze the relationship between the AMOS market and the sustainability of the farmland transfer market, methods such as conditional mixed process, the Heckman two-step method, and the Sobel test were employed to explore the influence of AMOS on farmland transfer and its underlying mechanisms. The empirical results show the following: (i) AMOS inhibits farmland transfer-out but promotes farmland transfer-in, which will intensify the market competition of farmland transfer. This result remains valid after correcting for the potential endogenous bias and selective bias and is consistent across different variables and samples. This conclusion suggests that AMOS has emerged as a factor restricting the sustainable development of the farmland transfer market in China. (ii) The heterogeneity analysis results indicate that AMOS has a greater inhibitory effect on the farmland transfer-out of small-scale farmers, part-time farmers, and elderly farmers, and a greater incentive effect on the farmland transfer-in of large-scale farmers, professional farmers, and non-elderly farmers. (iii) Labor allocation and agricultural capital allocation are the potential mechanisms for AMOS to affect farmland transfer. AMOS indirectly inhibits farmland transfer-out and promotes farmland transfer-in by farmland operation ability of labor force and benefits of farmland operation. These results imply that there is a complementary relationship and substitution relationship between the AMOS market and the farmland transfer market. The substitution relationship may sometimes frustrate policies aimed at stimulating the farmland transfer market. The Chinese government is required to be wary of the potential menace that AMOS brings to the sustainability of China’s farmland transfer market.