Pains and gains: opportunities and challenges for grain farmers to participate in short supply chain in China

Abstract China is in the transition period of accelerating the market circulation of agricultural products. No general conclusion has been reached regarding how the market circulation affects grain farmers’ participation in short supply chain. Therefore, this study aims at exploring the impact of short grain supply chain (SGSC) on farmers’ grain income, as well as the determinants of the participation of farmers in SGSC. OLS regression and two-step Heckman probability selection procedure (PSP) are adopted to examine the impact of SGSC on grain farmers’ income in China and the major determinants of their participation in SGSC, respectively. Two phases of the national farm households’ survey data from China Rural Revitalization Survey (CRRS) Database are applied, which were conducted by the Institute of Rural Development of the Chinese Academy of Social Sciences in 2020 and 2022, respectively. A total of 3400 valid samples are used in the estimations. Regression results show that SGSC significantly increases farmers’ grain income, in all three levels from the shortest SGSC 1 (only including face-to-face circulation), to the SGSC 2 (including face-to-face chain or spatial proximity chain), then to the mostly extended SGSC 3 (including face-to-face, spatial proximity or spatially extended chain). The results of two-step Heckman PSP indicate that farm cooperative, the pro-environment behavior under the condition of reaching minimum planting scale of 2.47 hectare, as well as the intensification of circulation risk significantly increase the probability of farmers’ participating in SGSC, while agricultural socialized service, planting size, and pandemic risk decrease the probability. The conclusions show that SGSC can help farmers achieve additional economic benefit which is crucial to the development and implementation of SFSC in China. However, the opportunities and challenges of farmer participation in SGSC coexist. The policies of government need to be focused and relevant to specific opportunities and challenges that farmers encounter in the transition of SGSC.