The effect of price support policies on food security and farmers’ income in China

Jiarong Qian, Shoichi Ito and Zhijun Zhao

Australian Journal of Agricultural and Resource Economics, 2020, vol. 64, issue 4, 1328-1349

Abstract: The current price support policies in China have positive impacts on grain prices and production costs. These policies mediate the impacts on grain supply and demand, and, in turn, affect food security and farmer income. This paper simulates and empirically establishes the effect of price support policies on food security and farmers’ net incomes through a partial equilibrium model that considers the policy impact mechanism. The results indicate that a 10 per cent support price increase in 2012 may result in (1) an increase of 1.38 and 6.19 percentage points in self‐sufficiency rates for rice and wheat, respectively, in the current year and (2) a respective increase of 28.6 and − 18.5 yuan/mu in net income for rice and wheat production in the year. Given the significant growth in grain support prices since 2008, the price support policies have produced a tremendous impact in terms of enhancing grain self‐sufficiency, while playing a crucial role in China’s food security strategies. However, due to the increased production costs associated with policy implementation, the income effect of the price support policies is rather small and even negative for wheat production. Hence, increasing farmers’ incomes should rely on other effective measures, such as providing income subsidies.

Date: 2020
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