Research On The Influence Of Domestic Support On Peasants' Income

Peasants' income in our country has been increasing slowly since agriculture entered the new historical stage. The Party Central Committee and the State Council proposed that their most important mission and basic goal are to increase peasants' income and governments of all levels should add more fund to agriculture and rural area. Domestic support is one of the three cores of WTO's Agreement on Agriculture that is becoming the mainstream of agricultural policy in the world. Whether developed countries or developing ones has implemented strictest protection to agriculture. But, there is much dispute about the effect of domestic support on peasants' income in domestic academic circles.Based on related theories and economic effect of domestic support and using comparative analysis, equilibrium analysis, normative analysis and positive analysis, this thesis begins with the general state of peasants' income whose main impeditive factor is the serious shortage of domestic support. The author evaluates the achievements of our country's domestic support on the reference of the way and experience of main member countries of WTO. This thesis focus on the influence of general services, grain subsidy and structural adjustment aids on peasants' income that provides reliable proof to the reform of agricultural domestic support policy under WTO rules.The main objects of this research are to analyze the impact of domestic support on peasants' income and to interpret the mechanism of income increase. The conclusions of this research are much meaningful and will help to ensure food security, increase peasants' income and finally realize the comfortable society. This thesis researches peasants' income from the completed new side of domestic support whose suggestions are more adaptable to the rules of WTO and the trade liberalization of agricultural products. This is the first time that the econometric model and linear programming are used in the analysis of domestic support's influence on peasants' income, so the conclusions are more direct and convinced. This thesis brings the grain subsidy reform into the range of research, which has been conducted throughout the country in last year and comprehensively analyzes the effect of grain subsidy on producers' decision and the level of income. Currently, our country hasnot established the system of structural adjustment aids, several kinds of which are sorted and analyzed in this thesis.There is close relationship between domestic support and peasants' income in our country. Domestic support has increased peasants' income from agriculture by promoting agriculture growth and raising the state's purchasing price of agricultural products. Domestic support has improved income outside agriculture by accelerating the transfer of rural surplus labor force. Agricultural domestic support has increased efficient supply of rural public goods and lightened peasants' burden outside the system. The payments under regional assistance have alleviated the problem of poverty in the country. The result of gray incidence analysis further indicates that the degree of the correlation between local finance and peasants' income is higher than central finance.Agricultural research service, rural education and irrigation investment in general services can remarkably advance the growth of peasants' income whose marginal rates of returns are much higher than private investment's. In the east and central region, the marginal rate of returns and the marginal rate of substitution of agricultural research are the highest. Rural education is in the next place. Irrigation investment is the lowest. While in the west region, rural education's marginal rate of returns and the marginal rate of substitution are the highest, next are agricultural research and irrigation. Moreover, the marginal rate of returns in the west region is obviously the highest. General services can reduce private cost by raising the output of agricultural products on unit area or substitute private cost while keeping the output unchanged. General services can also improve the quality of agricultural products and the level of rural human capital to raise peasants' income.The direct grain subsidy has increased peasants' income and stabilized grain production. This research simulates four subsidy plans, which are the grain subsidy unchanged, the subsidy increased 20%, the subsidy decreased 20% and the subsidy canceled. The results of linear programming indicate that the subsidy can increase peasants' income under the condition of the prices of agricultural products unchanged and the trade liberalization. The result also proves that the income is highest when the subsidy is increased 20%. In view of the subsidy cost and the effect on increasing peasants' income, to subsidize according to actual grain planting area is the most efficient of the three subsidy methods. Therefore, the reasonable choice is to subsidize according to the actual grain planting area and to increase the subsidy standard by 20%.