Can Fiscal Support for Productive Service Provision Expand the Scale of Grain Production? Evidence from China’s Pilot Program for Whole-Process Agricultural Production Socialized Services

In a large agrarian country with numerous smallholders, a key issue in food security governance is determining how to overcome the constraints of fragmented smallholder farming through productive service provision and thereby expand the scale of grain production. This study focuses on the pilot policy of whole-process socialized agricultural production services implemented during 2013–2016. This pilot served as an important policy foundation for the agricultural production trusteeship policy promoted nationwide after 2017 and represented an early institutional exploration of promoting service-scale operation through fiscal support for productive service provision in China. Using county-level panel data from three provinces over the period 2006–2016, this study evaluated the effect of fiscal subsidies embedded in outsourced service transactions on grain-sown area within a two-way fixed-effects framework with county and year fixed effects. The results show that the pilot significantly expanded the county-level grain-sown area, with the pilot counties increasing their grain-sown area by approximately 1.986 thousand hectares on average. When policy intensity is measured according to the amount of subsidies, each additional 10 million yuan of fiscal subsidies increased the grain-sown area by approximately 3.103 thousand hectares on average. Heterogeneity analysis shows that the marginal effects were stronger in counties with weaker fiscal capacity or lower levels of mechanization, indicating that the policy effects were more pronounced in areas with relatively weak initial conditions. In terms of policy implications, this paper recommends differentiated and performance-based support, improved governance of the agricultural service market, and prioritizing resource allocation to areas with weaker initial conditions, so as to enhance the scale and resilience of food security. This paper provides county-level quasi-causal evidence and an empirical reference for supporting agricultural productive services through fiscal policy to overcome the constraints of fragmented smallholder farming.