Agric. Econ. - Czech, 2018, 64(1):23-35 | DOI: 10.17221/167/2016-AGRICECON

The role of subsidy policies in achieving grain self-sufficiency in China: a partial equilibrium approachOriginal Paper

Jiarong QIAN1, Shoichi ITO2, Yueying MU3, Zhijun ZHAO1, Xuejun WANG*,4
1 Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences, Beijing, China
2 Department of Agricultural and Resource Economics, Kyushu University, Fukuoka, Japan
3 Collage of Economics and Management, China Agricultural University, Beijing, China
4 College of Economics and Management, Nanjing Agricultural University, Nanjing, China

Food security is a critically important issue in China and can be enhanced by implementing subsidy policies. This paper employs a partial equilibrium model which takes into account the impact mechanism of subsidy policies to simulate the impact of current subsidy policies on grain supply and demand and on enhancing grain self-sufficiency in China. The simulation results suggest that subsidies can generally promote grain production, reduce consumption, increase imports, reduce exports and increase ending stocks. Subsidies may also result in increases in grain self-sufficiency rate and stock-to-use ratio, but the increases are relatively small, indicating that the subsidies lack efficiency. Given that subsidies constitutes only a very small share of farmers' total income, and that significant scope remains for increasing subsidy levels in China, employing subsidy policies can help to enhance or at least maintain China's grain self-sufficiency at a high level. Various measures should be implemented to improve the inefficiency of the current subsidy system, such as (1) combining different types of subsidies; (2) providing discriminatory subsidies to poor/rich farmers or developing/developed areas; and (3) increasing subsidy rates for wheat and corn.

Keywords: equilibrium model, food security, impact of subsidy, simulation, supply and demand

Published: January 31, 2018  Show citation

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QIAN J, ITO S, Yueying M, ZHAO Z, WANG X. The role of subsidy policies in achieving grain self-sufficiency in China: a partial equilibrium approach. Agric. Econ. - Czech. 2018;64(1):23-35. doi: 10.17221/167/2016-AGRICECON.
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