Storage losses, market development and household maize-selling decisions in China

Abstract

PurposeThe purpose of this paper is to analyse the impacts of storage losses and market development on the maize-selling behaviours of rural households in China.Design/methodology/approachBased on the survey data of 543 households from nine major maize production provinces in China, the authors introduce storage losses to a household's maize-selling decision-making model and use fractional logit model and ordered probit model to empirically analyse the impact of maize storage losses and market development on household maize-selling decisions in China. To overcome potential endogeneity problems, the authors select the weather at drying (whether bad weather occurs during the drying process) and harvest loss as instrumental variables and re-estimate the model.FindingsThe results show that increased storage losses prompt farmers to increase the proportion of maize sold within three months after harvest and sell maize in advance. Meanwhile, the degree of market development has a significant impact on farmers' maize-selling decisions. Other factors, such as the maize output, non-agricultural employment and awareness of loss control, also affect farmers' maize-selling behaviours.Research limitations/implicationsThe government should promote advanced storage facilities, reduce household storage losses, decrease the phenomenon of centralised sales after harvest and help farmers freely choose the suitable time for sales. The government also needs to strengthen market information releases and publicity, reduce transaction costs and help farmers make reasonable sales decisions.Originality/valueThe authors introduce storage losses as a separate variable in a farmer's grain-selling decision model to empirically analyse the impact of storage losses on farmers' grain-selling behaviours. Moreover, the authors analyse the impact of market development on household grain-selling behaviours in China. These findings can help avoid oversupply in the market during the harvest season and alleviate the pressure on the market from the supply and demand imbalance. These results are also beneficial for farmers waiting for a higher price and increasing their income.

Price expectations, risk aversion, and choice of sales methods for large‐scale farmers under incomplete market conditions

“…Priceexpect i indicates whether the i th farmer expects the price of grain to rise in the following 6 months when harvesting in 2017, which is a measure of price expectations. Six months are used as the standard because the reality in China (H. Y. Liu et al, 2011; Luo et al, 2020; Sun et al, 2013) and among the farmers involved in the survey is that the overwhelming majority of large‐scale farmers in our sample sell all their grain within 6 months after harvesting (i.e., before seeding for the next year). This ensures that they have the adequate cash flow for their purchase of different materials and agricultural machinery and equipment in the new cycle, fulfilling the high capital investment required for agricultural scale management.…”