The role of agricultural cooperatives in improving mechanization levels: Differences between outsourcing machinery services and household‐owned machines

Abstract Although mechanization is reshaping rural and agricultural development by reducing drudgery through substituting farm labourers, improving input use efficiency and increasing farm productivity, the level of mechanization in developing countries still needs improvements. This study explores whether agricultural cooperatives can improve mechanization levels by investigating the differences between outsourcing machinery services and household‐owned machines. We consider mechanization adoption status and the mechanized ratio at different production stages, including tillage, seeding, pesticide spraying, fertilization and harvesting. Utilizing data collected by the Chinese Academy of Social Sciences and an inverse‐probability‐weighted regression adjustment estimator, we find that, overall, agricultural cooperatives significantly increase the probability of farmers’ adoption of mechanization for tillage, seeding, pesticide spraying, fertilization and harvesting by 5%–38% and mechanization ratios by 6%–29%. Disaggregated analyses reveal that agricultural cooperatives significantly increase the adoption probabilities and ratios of machines provided by outsourcing services by 9%–102% and 10%–79%, respectively. Among household‐owned machines, agricultural cooperatives only significantly impact tillage adoption, reducing farmers’ adoption probability and ratio by around 16%–21%. Our findings highlight the importance of agricultural cooperatives in improving farmers’ access to and use of machines provided by outsourcing services.