Breaking institutional barriers in sustainable food systems: how market segmentation inhibits farmers' green production technology inputs

Rong Chen, Lei Xu, J I A M I N Tang, ZM Yang, Huiyu Liu

This study analyzes how domestic market segmentation constrains the adoption of green production technologies in sustainable food systems. Using China's peach sector as a case, we address the paradox that green production technologies are widely available while many farmers remain locked in conventional high input regimes. We combine national wholesale price data with two farm level surveys covering 1,771 operators and construct a dual-dimensional index of market segmentation based on relative prices and farmers' perceptions of natural and institutional barriers. Quadratic regression models are used to examine non-linear effects on total production technology intensity, and Heckman selection models are used to identify impacts on both the probability and intensity of green investments. The results show an inverted U-shaped relationship between market segmentation and overall technology intensity, but a clear suppression of green production technologies. Higher segmentation lowers both the likelihood of adoption and the capital intensity of biomass based, digital and ecological practices. Institutional segmentation is more binding in traditional production areas, while natural segmentation related to transport and infrastructure is more restrictive in emerging areas. Higher labor quality mitigates these adverse effects. The findings highlight market segmentation as a hidden institutional barrier and point to unified domestic markets, improved logistics and targeted skills programs as priorities for the green transformation of fruit based food systems.