How does the improvement of farmers' financial literacy affect food production? Analysis of behavior and constraints based on element substitution and planting structure adjustment

• Published in: Food security Vol. 16; no. 3; pp. 721 - 733
• Main Authors: Li, Yichao, Xie, Xintong, Liu, Guihua, Xu, Dingde
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01-06-2024; Springer Nature B.V
• Subjects: Agriculture; Biomedical and Life Sciences; Cultivation; Environment; Farmers; Financial literacy; Food production; Food Science; Food security; Grain; Grain cultivation; Impact analysis; Life Sciences; Mechanization; Original Paper; Plant Sciences; Planting; Profitability; Rural development; Social Policy; Social Sciences; Substitutes; Financial literacy; Food production; Planting structure; Bartik IV; Advanced financial literacy
• ISSN: 1876-4517; 1876-4525
• DOI: 10.1007/s12571-024-01443-2

Food security is the foundation of national security, yet few studies have explored the impact of financial literacy on food production in the context of deepening rural financial development. Using data from the 2021 China Land Economy Survey, this paper theoretically and empirically analyzes the impact of factor substitution and cropping restructuring behavior on grain production brought about by farmers' financial literacy and further discusses the heterogeneous impact on grain production under different constraints. The results show that: (1) Farmers' overall financial literacy varies widely within the household, and the proportion of planting is still dominated by grain cultivation; (2) The increase of financial literacy has a significant inhibitory effect on grain cultivation area and grain mechanization; (3) Differences in the level of financial literacy and the difficulty of mechanical substitution will lead to heterogeneous effects on outcomes. The study recommends that governments should pay attention to the phenomenon of financial literacy-induced de-fooding. On the one hand, there is a need to make food production more economical and profitable for farmers; on the other hand, there is a need to regulate and advocate for comprehensive financial literacy and to reject profit-seeking.