Unlocking Rural Prosperity: How Agricultural Value Chains Drive Farmer Income Growth in China

ABSTRACT In the context of rural revitalization and agricultural modernization in China, increasing farmers' income has been a focal point. Based on the Agricultural Value Chain theory, this paper systematically analyzes how the Agricultural Value Chain theory promotes farmers' income growth from the perspective of the “second‐round effect” of the agricultural value chain. While the “second‐round effect” of the multi‐round effects of the Agricultural Value Chain mainly aims at promoting farmers' input to increase their income and attracting more farmers to join the Agricultural Value Chain. This paper analyzes the mechanisms of the Agricultural Value Chain in promoting increased farmers' income through enhancing farmers' input of production factors. It is based on survey data from 1194 households in 11 provinces in 2019, employing a Simultaneous Equation Model. The findings are that: Firstly, the Agricultural Value Chain significantly boosts farmers' income by promoting land transfer‐in, increasing agricultural productive investments, and reducing the proportion of non‐agricultural employment among farm family members. Secondly, land transfer‐in positively affects agricultural investment, while the proportion of non‐agricultural population exhibits a bidirectional negative impact on land transfer‐in. The increase in the proportion of non‐agricultural members reduces agricultural investment through land scale as an intermediary variable. Lastly, with the increase in the degree of off‐farm activities by households, the marginal income impact of the Agricultural Value Chain on farmers shows a trend of first declining and then rising. The Agricultural Value Chain, to some extent, diminishes income disparity among farmers, fostering household member specialization at the micro‐level and differentiation among households at the macro‐level. Consequently, the paper suggests further encouragement of innovative benefit linkage mechanisms within the Agricultural Value Chain to enhance income for more farmers. Additionally, it recommends emphasizing specialized training for farmers to facilitate their development toward higher quality. Furthermore, enhancing the inclusiveness of the Agricultural Value Chain, reducing entry barriers for low‐income farmers, narrowing income gaps, and achieving common prosperity and agricultural modernization are considered essential.