Premium procurement channel access and farm-gate prices: evidence from rice farmers in China

This study examines not only whether paddy procurement channels are associated with price differences in China, but also which farmers are able to capture the gains from the premium channel. Using farm-level panel data, we classify farmers’ paddy sales into four procurement-channel categories: the intermediary channel, the milling channel, the grain depot channel, and multi-channel sales. We estimate net farm-gate paddy price differentials using household fixed-effects models, assess heterogeneity by farm size, rice-income dependence, and adoption of high-quality varieties, and analyze access to the empirically identified premium channel using binary logit and fixed-effects linear probability models. We find that only the milling channel is consistently associated with a price premium. In the baseline specification, selling through the milling channel is associated with net farm-gate paddy prices about 4.5% higher than those received through the intermediary channel. The premium is larger for large-scale farmers, households less reliant on rice income, and growers of high-quality varieties. Medium-scale farmers emerge as the “missing middle”: they are less likely to access the premium channel and least likely to move into it over time. Access to formal market information is robustly associated with premium-channel access, while storage capacity strengthens the price premium associated with the milling channel. Overall, the results suggest that the gains from procurement-channel upgrading are unevenly distributed and depend crucially on who can reach the premium channel and convert that access into realized price gains.