Zhao Ding, Qianyu Zhang
Integrating farmers into the modern agricultural industrial system is key to sustaining rural household income growth. Based on field survey data from rural areas in three western Chinese provinces, this study uses an endogenous switching regression (ESR) model to analyse the impact of farmers' participation in agricultural supply chains on their income, and explores the heterogeneous effects of credit constraints and agricultural loans on the incomes of participating and non-participating farmers. The results show that supply chain participation significantly increases farmers' total and operational income, while driving the modernisation of agricultural production methods. Specifically, supply chain participation enables farmers to use agricultural loans efficiently to drive income growth and alleviate income constraints caused by credit restrictions. Furthermore, the positive effect of supply chain participation on operational income is more prominent, especially for low- and middle-income farmers. In contrast, the income-increasing benefits of agricultural loans are more pronounced among middle- and high-income farmers, reflecting differences in loan utilisation capacity across income groups.