2026 General Seminar - Yu Sheng (ANU Crawford)

Title: Mechanization Services, Farmers’ Adverse Selection and Productivity: Evidence from Farm-level Wheat Production in China 

by Yu Sheng, Hangyu Zhang and Jiping Ding

Abstract:  This paper investigates the adoption and productivity effects of mechanization services across ploughing/sowing, plant protection, and harvesting stages in Chinese agriculture. Utilizing a balanced panel dataset of 145 wheat farms in North China from 2013 to 2020, featuring detailed stage-specific input and output data, we estimate a multi-stage production function and evaluate the role of mechanization services relative to self-owned capital through the structural econometric modeling estimate. Findings reveal significant under-utilization of mechanization services by 20-50% during plant protection, driven by adverse selection due to unobservable provider performance, constrains overall mechanization adoption and
limits farm-level productivity growth. By quantifying stage-specific productivity impacts, we identify this critical market failure impeding mechanization adoption by up to 20% and its potential to enhance efficiency by 7%. These results provide actionable insights for developing countries with smallholder-dominated agriculture, informing policies to promote mechanization and sustain agricultural productivity.