Chinese researchers uncover impacts of interlinked credit and insurance contracts on adoption of improved rice varieties
A research team from the Institute of Agricultural Resources and Regional Planning at the Chinese Academy of Agricultural Sciences (CAAS), has revealed how interlinked credit and insurance contracts (ICIC) influence farmers' adoption of improved rice seeds in China's major grain-producing areas. The findings, published in the Australian Journal of Agricultural and Resource Economics, provide new theoretical insights and policy guidance for enhancing seed technology adoption. Improved crop varieties are crucial for national food security. By reducing dependence on chemical fertilizers and pesticides, lowering production costs, boosting resilience to climate change, and improving grain quality, seed innovation is critical for the strategies of "storing grain in the land and in technology." Moreover, developing and promoting improved seeds are essential to breaking reliance on foreign germplasm and securing self-sufficiency in China's seed industry.
Drawing on micro-survey data of rice farmers in Hunan and Sichuan provinces, the CAAS team employed experimental economic methods to empirically examine the effect of ICIC on improved rice seeds adoption behavior. Results show that these financial products significantly promoted the use of improved rice varieties, primarily by reducing farmers' risk aversion and releasing credit constraints.
The study makes three key contributions. First, it systematically proposes a theoretical mechanism of ICIC impacting farmers' seed adoption decisions, validated with extensive field data. Second, it clarifies how such financial innovations boost improved seeds adoption, offering feasible pathways for wider promotion. Third, it underscores the importance of coordinated seed technology dissemination, providing policy references for enhancing grain output and farmer income in major rice-growing regions.
The paper, titled "Can Interlinked Credit and Insurance Contracts Boost Farmers' Adoption of Improved Rice Varieties? Field Experimental Evidence from China", was co-authored by Dr. Wu Haixia (first author) and Prof. Li Jianping (corresponding author). The research was supported by the State Key Laboratory of Efficient Utilization of Arid and Semi-Arid Arable Land, the National Modern Agricultural Industry Technology System, and the National Natural Science Foundation of China.
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