What is it about?

As China is the world’s largest producer, importer, and consumer of agricultural products, the new agricultural subsidy policy has significant implications for the global agricultural market. China’s agricultural subsidy policy has undergone significant changes in recent years. We adopt the difference-in-difference method to verify the impact of the new agricultural subsidy on grain production. Its mechanism and heterogeneity effects are investigated using a unique panel dataset.

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Why is it important?

Although a significant amount of public expenditure is dedicated to grain subsidy programs in China and worldwide, it still needs to be clarified what impacts they have on grain production. Unlike the US and the European Union (EU), China has recently introduced a new agricultural subsidy program. Given China’s enormous population, any changes in agricultural policy could have far-reaching implications for international food trade and global food security. A deeper understanding of the impact of new farm subsidies on China’s grain production contributes to bridging research gaps on how these policy measures function in developing countries. This could be very helpful for other countries seeking to implement similar agricultural subsidy policies.


To the best of my knowledge, it is the first study focusing on China’s new agricultural subsidy policy using nationally representative panel data. This analysis is important because grain production costs in China have risen in recent years. The central government aims to use the new agricultural subsidy to incentivize operators to grow grain crops. However, the potential capitalization of the agricultural subsidy may offset the income effect and even negatively affect the grain sown area. This study reveals the mechanism through which the new agricultural subsidy affects grain acreage by evaluating the factors of renting farmland or adjustments to cropping structures (crop mix).

Mr. Pengfei Fan
Nanjing Agricultural University

Read the Original

This page is a summary of: The impact of China’s new agricultural subsidy policy on grain crop acreage, Food Policy, July 2023, Elsevier,
DOI: 10.1016/j.foodpol.2023.102472.
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