Examining the relationship between channel disintermediation and chemical fertilizer application: Empirical evidence from smallholder farmers in central China

Abstract

Digital advancements have reshaped the sales channels for industrial products like chemical fertilizers, allowing for the elimination of certain intermediaries. Utilizing survey data from 1374 rice-growing smallholder farmers across counties in central China, this study explored the impact of disintermediation in chemical fertilizer sales channels on application rates among smallholder farmers. Benchmark regression analyses indicated that channel disintermediation significantly decreased chemical fertilizer application across various scenarios. Additionally, the alignment of contractual factors and technical services between chemical suppliers and farmers, facilitated by disintermediation, reduced chemical fertilizer application. Heterogeneity analysis revealed that the reduction in chemical fertilizer application due to channel disintermediation was more pronounced among farmers with higher digital literacy or lower production capacity. These findings highlighted the importance of encouraging chemical suppliers with direct-to-consumer channels to enhance their technical services and increase supervision over the quality of their products and services, thereby building trust among farmers and facilitating their adaptation to changes in the sales channel structure.