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Grain Subsidy Policies, Production Factors Input And Productiveness In China

Posted on:2016-07-24Degree:DoctorType:Dissertation
Country:ChinaCandidate:F XieFull Text:PDF
GTID:1109330464962395Subject:Public Finance
Abstract/Summary:PDF Full Text Request
Grain production and development is the basic of national economics, and it’s also one of the most important tasks of the Chinese government. Chinese government eliminated the agriculture tax and started the grain subsidies in 2004. From then on, the agriculture subsidies system began to be established, which includes the grain direct subsidy, the farm machinery subsidy, the improved seeds subsidy, the agricultural comprehensive subsidy. China also had the minimum purchase price policy for grain and the temporary storage policy. On the positive side, these agricultural policies played an important role in increasing farmer income and maintaining grain market stability for ensuring the country’s food supply security. But our government suffered from a number of problems. The grain subsidies led to the severe financial burden, especially under economic depression. On the other hand, the great grain subsidies probably distorted food pricing mechanism, which allocate resources from the non-agricultural industries to the agriculture. Relevant costs from food storage and processing enterprises would greatly be high. All these will be harmful to the health of agriculture.As for what we mentioned above, this paper studies how the current agricultural subsidies affect our food production in the view of the subsidy implementation situation and efficiency. Under the previous relevant research, we knew the agriculture production factor could be affected by the subsidies because of the change of relative prices of production factor (Kasimis and Papadopoulos,2005). We also knew these subsidies would change agricultural input level and input structure. Some research showed these subsidies could be inefficient, which led to welfare losses and efficiency losses. Therefore, in order to show performance of agricultural subsidies, this paper makes a further exploration on subsidies affection of food productivity from the view of agricultural investment.Generally, it has three major goals in this study, Which are as follows.Firstly, to identify the influence of grain subsidy policies on grain production input.Secondly, try to explore the effect of grain subsidy policies on grain productiveness and the functional way.The third, to analysize the policy and give some useful suggestions.In a word, this study objectively evaluates the performance of grain subsidy policies as well as further proposes some policy suggestions on improving the policy.In grains producing, peasants invest many production factors, which can be divided into two parts:one part is labor, the other is the capital factor. Through the analysis on labor factors, the capital factors since 2003, its proportion of the total production cost(relevant data from the "National Agricultural Products Cost and Benefit Compilation"), We found that labor quantity is significantly reduced in ten years, namely labor employment per mu reduced by almost 50% in our grain production, while the level of mechanization in 2003 is increased from 32% to 60% in 2013, indicating the capital factor input had greatly replaced the labor factor input. As for other production factors, fertilizers input are steadily increasing, the amount of seed is in the relative stability. By statistically analyzing structural changes in the cost of grain production input factors, we found capital labor ratio rose slightly a few years ago, but in nearly six years it was in the rapid decline. But if we take into account that the prices of various factors, the decline in the ratio of capital and labor can not reflect the real changes. So we have to use the same price of factor to process the production factor prices over the years for consistency. The results showed that the capital labor ratio in our country in recent years has been an upward trend, from less than 1 times in 2003 to more than 2 times in 2013.Therefore, during the implementation of the grain subsidies in China in the past ten years, capital input in food production has greatly to replace labor. There are great changes in Chinese grain production.Labor belongs to the labor class in the grain production input, so it is necessary to study the effects of grain subsidies on agricultural labor transferring. In this paper, from the theoretical analysis on agricultural labor choice, we found Chinese grain subsidies slowed down agricultural labor migration with help of the theoretical model of labor occupation decision in the two-industry model proposed by Barkley (1990).This paper used grain subsidies, agricultural labor migration rate from 2004 to 2013 and other relevant data (the data from "China Statistical Yearbook" and "China Agricultural Yearbook") by the statistical software Eviews8.The results show that the regression coefficient of our grain subsidy is significantly negative, indicating the grain subsidy significantly slowed down Chinese agricultural labor transferring to non-agricultural industries. By the way of increasing income, our country attracted agricultural labors in grains production for ensuring the food productions stable.Agricultural machinery is the main capital factor in grain production. It is also the main capital factor replacing agricultural labors. Therefore it is important to study the effects of agricultural machinery subsidy to machinery input for further studying the effects of grain subsidies to the capital labor ratio. Based on the consumer utility curve and farmers’ machinery purchase theory, the paper put forward the hypothesis, and then established the econometric model. With Chinese related agriculture data from 2000 to 2013 (data from "China Agricultural Machinery Industry Yearbook" and "China Statistical Yearbook"), the econometric model was tested. The results showed that there is positive influence on total power of agricultural machinery from the agricultural machinery subsidy. The positive effects also occurred in the large tractor ownership. However, it is week, namely the coefficient of effects of agricultural subsidies is small. The other result is that the agricultural labor migration for the purchase of agricultural machineries also has positive and significant influence.Solow (1957) held economic is growing due to the increase of input of production factors and of total factor productivity(TFP), but total factor productivity (TFP) is fundamental. That is to say, we can’t take the increase of the input of production factors as the economic growth reason. Therefore, the fundamental way to promote the modernization of agricultural is to improve the agricultural total factor productivity (TFP).In the past ten years the average annual growth of the main food’s TFP is only 2.66%. This is mainly due to the technical efficiency growth in 2004 (It is largely due to the inspiration of the potential productivity of the agricultural tax reform).Apart from this reason, we found that TFP of main food production in China in recent years almost is a negative growth. Based on this fact, this paper used the Cobb-Douglas production function to analyze farmers’ profit. The conclusion is that there is the negative impact of grain subsidies on the production efficiency. The empirical results supported the theoretical analysis. That means our grain subsidies for grain production TFP has a negative impact. This study also found that the capital labor ratio partly plays an intermediary role, that is to say, the grain subsidies have the negative impact on TFP by the way of the capital labor ratio. The relevant data is from the "National Agricultural Products Cost and Benefit Compilation" and "China Yearbook of Agricultural Statistics."In 2014, new American farm bill took effective, which made a major adjustment of American agricultural subsidy system. one of the most striking reform is the elimination of fixed direct subsidies, which is replaced by the agricultural subsidies with connection of price, income or production and the agricultural insurance. The American agriculture subsidy reform represents the tendency of the new agricultural subsidy reform, which certainly will influence the agriculture negotiation of World Trade Organization. At present, China still take great efforts in the construction of agricultural income safety net, legal system, strengthening agricultural subsidies, adhering to the reform of agricultural insurance, Organizations considering farmers’ interests and actively attracting more new generation labor into agricultural production.All in all, the paper finally puts forward the improvement of the grain subsidy system of our country. These improvements are as follow:to readjust the grain subsidy of China; deeply to consider the national food security; to promote the transfer of agricultural labor; to promote scale management of the grain production;construction of continuous, stable agricultural legal system; gradually to promote the agricultural insurance; to construct farmers organization representing farms’ interests.
Keywords/Search Tags:Grain Subsidy Policy, Production Factor Input, Capital-Labor Input Ratio, Total Factor Productivity
PDF Full Text Request
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