E-commerce Adoption and Technical Efficiency of Wheat Production in China

Improving technical efficiency (TE) is crucial for the sustainable growth of smallholder agriculture in developing countries. While there has been a large literature investigating the determinants of smallholders' agricultural technical efficiency, little is known about the effect of e-commerce on agriculture and crop production efficiency despite the growing importance of rural e-commerce in developing countries. This study, therefore, bridges the research gap by examining the impact of e-commerce adoption on TE using household survey data of wheat farmers in China. We employ the combination of propensity score matching (PSM) and a selectivity-corrected stochastic production frontier model to address the possible selection biases stemming from both observable and unobservable factors. We found that e-commerce adoption would lead to a 2.75 per cent increase in the technical efficiency of wheat production. Our study also complements the existing research of rural e-commerce, which mainly focuses on the benefits of e-commerce from the perspective of market opportunity and farmers' welfare.