How Does China’s Agricultural Subsidy Policy Drive More Commercially Productive Small Farmers? The Role of Farmland Scale, Labor Supply, and Cropping Structural Change

Jian Zhang, Awais Jabbar and Xin Li ()
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Jian Zhang: Research Center for Land Use and Ecological Security Governance in Mining Areas, China University of Mining and Technology, Xuzhou 221116, China
Awais Jabbar: College of Economics and Management, Three Gorges University, Yichang 443002, China
Xin Li: Research Center for Land Use and Ecological Security Governance in Mining Areas, China University of Mining and Technology, Xuzhou 221116, China

Land, 2024, vol. 13, issue 12, 1-15

Abstract: This study investigated the impact of China’s agricultural subsidy policy on farmers’ commercial production, indicated by sales market participation. A nationally representative survey data, panel Tobit model, IV Tobit model, and the Correlated Random Effects (CRE) approach were used. The findings reveal that farmers receiving agricultural subsidies have improved crop sales’ share of total output value. Mechanism analysis reveals that agricultural subsidies have driven up farmland scale and increased agricultural labor supply in production, incentivizing the motive for profit maximization among farmers. Meanwhile, agricultural subsidies also encourage farmers to cultivate more grain crops. Policymakers should continue deepening the reform of agricultural subsidies and promoting farmer specialization and commercial production. Moderate-scale operation of farmland should be one of the targets of agricultural subsidies.

Keywords: agricultural subsidy; land use change; farmland scale; commercial production; China (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2024
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