Agric. Econ. - Czech, 2024, 70(4):165-177 | DOI: 10.17221/335/2023-AGRICECON

Unravelling the bidirectional impact of Chinese agricultural subsidy policy on agricultural efficiency and farmers‘ income through panel data analysisOriginal Paper

Yungang Tang1, Haojie Liao2, Ye Wu1, Gang Lei3
1 Guangdong Provincial Key Laboratory of Public Finance and Taxation with Big Data Application, Guangdong University of Finance and Economic, Guangdong Guangzhou, P. R. China
2 School of Accounting and Auditing, Guangxi University of Finance and Economics, Nanning, P. R. China
3 School of Management, Guangdong University of Science and Technology, Guangdong Dongguan, P. R. China

This study examined the bidirectional impact of Chinese agricultural subsidy policies on agricultural efficiency and farmers’ income. It employed panel data from 2004 to 2020 across 31 Chinese provinces, and the three-stage least squares method was used for simultaneous estimation. Different regions and farmer types were analysed separately. The findings revealed a significant bidirectional impact of the agricultural subsidy policy on agricultural efficiency and farmers’ income, signifying a strong positive feedback loop. Varied types and levels of subsidy policies differently impacted regions and farmer categories, showcasing diverse outcomes and adaptive responses to subsidy policies. The ratio of total subsidy to GDP (SUBGDP) positively impacted production efficiency and per capita disposable income. This result suggests that the subsidy policy helped enhance agricultural production efficiency and increased farmers’ income levels. Conversely, the ratio of various subsidies to the total subsidy manifested different directions and degrees of impact on production efficiency and per capita disposable income, suggesting areas where the subsidy policy framework can be optimised. In addition to presenting a theoretical discussion on agricultural subsidy policies, this study provides theoretical insights and policy recommendations for the formulation and implementation of an optimal agricultural subsidy policy.

Keywords: income level; per capita disposable income; production efficiency; rural society

Received: October 5, 2023; Revised: January 20, 2024; Accepted: March 13, 2024; Published: April 25, 2024  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Tang Y, Liao H, Wu Y, Lei G. Unravelling the bidirectional impact of Chinese agricultural subsidy policy on agricultural efficiency and farmers‘ income through panel data analysis. Agric. Econ. - Czech. 2024;70(4):165-177. doi: 10.17221/335/2023-AGRICECON.
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Adelekan Y. A., Omotayo A.O. (2017): Linkage between rural non-farm income and agricultural productivity in Nigeria: A Tobit-two-stage least square regression approach. The Journal of Developing Areas, 51: 317-333. Go to original source...
    2. Amare M., Cissé J.D., Jensen N.D., Shiferaw B. (2017): The Impact of Agricultural Productivity on Welfare Growth of Farm Households in Nigeria: A Panel Data Analysis. Rome, FAO: 28.
    3. Amores A.F., Contreras I. (2009): New approach for the assignment of new European agricultural subsidies using scores from data envelopment analysis: Application to olive-growing farms in Andalusia (Spain). European Journal of Operational Research, 193: 718-729. Go to original source...
    4. Awoyemi B.O., Afolabi B., Akomolafe K.J. (2017): Agricultural productivity and economic growth: Impact analysis from Nigeria. Scientific Research Journal (SCIRJ), 5: 1-7.
    5. Bai J., Wang Y., Sun W. (2022): Exploring the role of agricultural subsidy policies for sustainable agriculture based on Chinese agricultural big data. Sustainable Energy Technologies and Assessments, 53: 102473. Go to original source...
    6. Balogh J.M. (2023): The impacts of agricultural subsidies of Common Agricultural Policy on agricultural emissions. Agricultural Economics - Czech, 69: 140-150. Go to original source...
    7. Bernini C., Galli F. (2024): Economic and environmental efficiency, subsidies and spatio-temporal effects in agriculture. Ecological Economics, 218: 108120. Go to original source...
    8. Bojnec ©., Fertõ I. (2013): Farm income sources, farm size and farm technical efficiency in Slovenia. Post-Communist Economies, 25: 343-356. Go to original source...
    9. Bojnec ©., Fertõ I. (2022): Do different types of Common Agricultural Policy subsidies promote farm employment? Land Use Policy, 112: 105823. Go to original source...
    10. Borenstein M., Hedges L.V., Higgins J.P., Rothstein H.R. (2010): A basic introduction to fixed-effect and random-effects models for meta-analysis. Research Synthesis Methods, 1: 97-111. Go to original source... Go to PubMed...
    11. Bronfenbrenner M. (2017): Income Distribution Theory. New York, Routledge: 487. Go to original source...
    12. China Agricultural Development Report (2004-2016): China Agricultural Development Report. Available at http://www.tjcn.org/tjnj/NNN/35798.html (accessed Sept 25, 2023; in Chinese)
    13. China Agricultural Statistical Yearbook (2004-2020): China Agricultural Statistical Yearbook. Available at http://www.tjnjw.com/hangye/n/zhongguo-nongye-nianjian.html (accessed Sept 25, 2023; in Chinese)
    14. China Statistical Yearbook (2004-2020): China Statistical Yearbook. Available at https://www.stats.gov.cn/english/Statisticaldata/yearbook/ (accessed Sept 25, 2023)
    15. Cimpoieº L. (2021): Agricultural support policy in Moldova: A key factor to agricultural development? Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development, 21: 169-176.
    16. Cong R.G., Brady M. (2012): How to design a targeted agricultural subsidy system: Efficiency or equity? PLoS ONE, 7: e41225. Go to original source... Go to PubMed...
    17. Djomo J.M.N., Sikod F. (2012): The effects of human capital on agricultural productivity and farmer's income in Cameroon. International Business Research, 5: 134. Go to original source...
    18. El Benni N., Finger R., Mann S. (2012): Effects of agricultural policy reforms and farm characteristics on income risk in Swiss agriculture. Agricultural Finance Review, 72: 301-324. Go to original source...
    19. FAO, UNDP, UNEP (2021): A Multi-Billion-Dollar Opportunity - Repurposing Agricultural Support to Transform Food Systems. Rome, FAO, UNDP, UNEP: 28.
    20. Fan P., Mishra A.K., Feng S., Su M. (2023a): The effect of agricultural subsidies on chemical fertilizer use: Evidence from a new policy in China. Journal of Environmental Management, 344: 118423. Go to original source... Go to PubMed...
    21. Fan P., Mishra A.K., Feng S., Su M., Hirsch S. (2023b): The impact of China's new agricultural subsidy policy on grain crop acreage. Food Policy, 118: 102472. Go to original source...
    22. Ganbold N., Fahad S., Li H., Gungaa T. (2022): An evaluation of subsidy policy impacts, transient and persistent technical efficiency: A case of Mongolia. Environment, Development and Sustainability, 24: 9223-9242. Go to original source...
    23. Hallett G. (1968): The Economics of Agricultural Policy. Oxford, Blackwell: 292.
    24. Hedges L.V. (1994): Fixed effects models. In: Cooper H., Hedges L.V.: The Handbook of Research Synthesis. New York, Russel Sage Foundation: 285-300.
    25. Hoque A. (1993): Allocative efficiency and input subsidy in Asian agriculture. The Pakistan Development Review, 32: 87-99. Go to original source...
    26. Huang J., Wang X., Rozelle S. (2013): The subsidization of farming households in China's agriculture. Food Policy, 41: 124-132. Go to original source...
    27. Johnson D.G. (1948): The use of econometric models in the study of agricultural policy. Journal of Farm Economics, 30: 117-130. Go to original source...
    28. Kirwan B.E. (2007): The distribution of US agricultural subsidies. SSRN Electronic Journal. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1117342 (accessed June 5, 2007) Go to original source...
    29. Kumbhakar S.C., Lovell C.A.K. (2003): Stochastic Frontier Analysis. Cambridge, Cambridge University Press: 333.
    30. Latruffe L., Bravo-Ureta B.E., Carpentier A., Desjeux Y., Moreira V.H. (2017): Subsidies and technical efficiency in agriculture: Evidence from European dairy farms. American Journal of agricultural economics, 99: 783-799. Go to original source...
    31. Li C., Sha Z., Sun X., Jiao Y. (2022): The effectiveness assessment of agricultural subsidy policies on food security: Evidence from China's poverty-stricken villages. International Journal of Environmental Research and Public Health, 19: 13797. Go to original source... Go to PubMed...
    32. Nasrin M., Bauer S., Arman M. (2018): Assessing the impact of fertilizer subsidy on farming efficiency: A case of Bangladeshi farmers. Open Agriculture, 3: 567-577. Go to original source...
    33. Ministry of Agriculture and Rural Affairs (2017): Guiding Opinions of the Ministry of Finance and the Ministry of Agriculture on Adjusting and Improving Three Agricultural Subsidy Policies. Available at http://www.moa.gov.cn/nybgb/2015/qi/201712/t20171219_6103732.htm (accessed Sept 25, 2023; in Chinese).
    34. National Bureau of Statistics (2021): How are economic zones divided? Available at https://www.stats.gov.cn/ (accessed Sept 25, 2023; in Chinese)
    35. National Development and Reform Commission (2012): Thoughts on the Direct Subsidy Policy for Grain Production. Available at https://www.ndrc.gov.cn/xwdt/gdzt/znzcls/201207/t20120703_1201194.html (accessed Sept 25, 2023; in Chinese)
    36. Priyanka L., Jarial S., Chandel B.S. (2022): Agricultural subsidies: Curse or boon? A review. International Journal of Agricultural Extension, 10: 279-290.
    37. Staniszewski J., Borychowski M. (2020): The impact of the subsidies on efficiency of different sized farms. Case study of the Common Agricultural Policy of the European Union. Agricultural Economics - Czech, 66: 373-380. Go to original source...
    38. Tan C., Tao J., Yi L., He J., Huang Q. (2022): Dynamic relationship between agricultural technology progress, agricultural insurance and farmers' income. Agriculture, 12: 1331. Go to original source...
    39. Tleubayev A., Bobojonov I., Götz L. (2022): Agricultural policies and technical efficiency of wheat production in Kazakhstan and Russia: Evidence from a stochastic frontier approach. Journal of Agricultural and Applied Economics, 54: 407-421. Go to original source...
    40. Valera H.G.A., Gopalakrishnan B.N., Chakravarthy S., Bharathi S., Balié J., Pede V.O. (2024): The impacts of reforming agricultural policy support on cereal prices: A CGE modeling approach. Journal of Economic Studies, 51: 202-221. Go to original source...
    41. Zellner A., Theil H. (1992): Three-stage least squares: Simultaneous estimation of simultaneous equations. In: Raj B., Koerts J. (eds): Henri Theil's Contributions to Economics and Econometrics: Econometric Theory and Methodology. Dordrecht, Springer: 147-178. Go to original source...
    42. Zhao W. (2023): Analysis of the agricultural subsidy policy to be conducive to food security. Journal of Education, Humanities and Social Sciences, 15: 53-60. Go to original source...
    43. Zhang D., Wang H., Lou S. (2021): Research on grain production efficiency in China's main grain-producing areas from the perspective of grain subsidy. Environmental Technology and Innovation, 22: 101530. Go to original source...

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content