Pesticide Behaviors Under Output Price Risk: Evidence From China's Lychee Market

ABSTRACT The influence of output price risk on pesticide behavior is a critical area of research. This study explores the effect of output price risk on pesticide consumption by combining a nationally representative sample of lychee farmers with high‐frequency prices along the supply chain in China. Our findings robustly demonstrate that agricultural households significantly increase their pesticide expenditure when output price risk rises. Furthermore, we identify that the operating mechanism is driven by increased nonfarm work participation among peer households. The heterogeneity analysis indicates that the effects of output price risk are especially pronounced in the consumption of herbicides and conditioners and among small‐scale households. In the analysis of typical plots, we further find that agricultural households tend to increase spraying intensity instead of spraying frequency. The insights derived from this study can assist policymakers in formulating agricultural policies to enhance farmers' pesticide management practices amid the instability of output prices.