The Impact of Target Price Policy on Cotton Cultivation: Analysis of County-Level Panel Data from China

Wei Wang, Chongmei Zhang, Jiahao Song and Dingde Xu
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Wei Wang: Department of Agriculture and Forestry Economics and Management, College of Management, Sichuan Agricultural University, 211 Huimin Rd., Chengdu 130062, China
Chongmei Zhang: Department of Agriculture and Forestry Economics and Management, College of Management, Sichuan Agricultural University, 211 Huimin Rd., Chengdu 130062, China
Jiahao Song: Department of Rural and Regional Development, College of Management, Sichuan Agricultural University, 211 Huimin Rd., Chengdu 130062, China
Dingde Xu: Sichuan Center for Rural Development Research, College of Management, Sichuan Agricultural University, 211 Huimin Rd., Chengdu 130062, China

Agriculture, 2021, vol. 11, issue 10, 1-18

Abstract: China is an important cotton production area in the world. Since 2014, China has implemented a cotton target price subsidy policy in Xinjiang for 7 years. As the policy implementation time has lengthened, some deep-seated problems have started to emerge. Therefore, it is necessary to summarize and evaluate to clarify the future policy direction of the cotton target price subsidy policy. Based on county-level panel data of Xinjiang and Shandong from 2011 to 2018, this paper used the Propensity Score Matching—Difference in Difference method to analyze the impact of the implementation of cotton target price subsidy policy on cotton planting in Xinjiang. The results showed that: (1) after the implementation of the cotton target price subsidy policy, cotton production was stimulated by the transition, cotton producers’ enthusiasm for cotton production was higher, cotton production increased rapidly, and the yield per unit area decreased, indicating that there was a ’bubble’ in cotton cultivation. (2) The target price subsidy policy mainly achieves the expansion of the cotton planting scale by reducing the area of competitive crops. In view of the above research conclusions, this paper further explains its policy implications. It is proposed that the future cotton target price level should be formulated to fully consider the comparative benefits between different crops, to restrict the subjects that enjoy subsidies and the upper limit of subsidies, and strictly implement the concept of green development; it is necessary to guide cotton production out of ecologically vulnerable areas.

Keywords: target price subsidy policy; cotton policy effects; cotton cultivation (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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