The Scaling-up of Agricultural Mechanization Services and the Re-shaping of Small-Scale Household Farming in China

Abstract Taking the case of the agricultural mechanization service industry as an example, this study discusses the dynamics of the transformation of China’s agricultural contracting service industry in the context of the scaling-up of agricultural production, and how the transformation is reshaping small-scale household farming in grain production. With the accelerated growth of farmland transfer, large-scale agricultural producers have been emerging rapidly in different parts of China in the past years. Since their demand for agricultural contracting services is different from that of small-scale household producers, the scaling-up of agricultural production has promoted the scaling-up of agricultural contracting services. Meanwhile, the capital surplus in the agricultural machinery manufacturing industry has created three consequences simultaneously: the excess supply of agricultural mechanization services, the acceleration of agricultural machinery renewal, and the rising cost of machinery purchases. The interactions of these three factors not only raised the threshold of the agricultural machinery service industry, which makes it difficult for part-time service providers to survive market competition, but also shortened the time window for machinery service provision, which makes it difficult for large-scale agricultural producers to balance land operation and machinery service provision. Consequently, large-scale agricultural machinery service organizations are continuously replacing those small-scale part-time service providers. During this process, small-scale household producers engaged in grain production are faced with increasing risks of being excluded from farming, both directly and indirectly, as it is difficult for small producers to deal with large service organizations, and the small-scale part-time service providers that used to serve them are continually being replaced.