The Research Of Soybean Target Price Subsidy Policy And Its Effect

With the urban and rural residents' dietary structure upgrade, the domestic soybean demand is growing rapidly. However, it is an opportunity accompanied by risk and challenge, especially after China enter WTO, China implementation of a 3% single tariff for soybean, a large number of low-cost international soybean impact on the domestic industry market that caused enormous impact. Subsequently,China launched a series of industrial revitalization plan and support policies to stabilize the soybean industry and encourage the development of domestic soybean industry. In recent years, the "temporary purchase and storage policy" of soybean could protect of soybean farmers' interests and play an important role for protect the national food security. However, with the normalization of China's temporary purchase and storage policy, it has been gradually formed a low-cost international market and high-priced domestic market coexist. With the temporary purchase and storage guide prices increases every year, soybean imports have the same trend, the policy control space gradually narrowed and the policy effect also declined. In the severe domestic and international situation, according to the requirements of the central number one file in 2014 and the deployment of the State Council, China's soybean industry start soybean target price subsidy pilot in the three northeastern provinces and Inner Mongolia since 2014, which marks China begin to test soybean price subsidies and price separation policy.Under the situation of the increase pressure at domestic and overseas and combined international experience, there are very important meaning for the agricultural industry development in China, it could guarantee the national food security, improve agricultural international competitiveness and promote agricultural sustainable development through the recent development of China's soybean industry.The logical sequence of this study as following: firstly, analyze the price characteristics of soybean market. Secondly, analyze the industry support policy issues through the development of soybean industry support policy. Thirdly, based on the comprehensive understanding of soybean target price subsidy policy in China, and through the DCC-GARCH model calculate the marketization degree and the effect on farmer's income in domestic and foreign soybean market. Fourthly, the paper uses the DID model and Panel model to further analyze the influencing factors of soybean plant in China. Fifthly, through the experience of the main agricultural countries support policy change, proposed the suggestions of how to perfect China's target price subsidies. At last, present policy measures on the development of China's soybean industry and encourage famers' production.The research for soybean market pricing mechanism shows that although the volatility remains strong, China's soybean pricing already did market-set prices and high quality high price. After soybean target price subsidy policy change, the domestic and foreign markets correlation coefficient results show that: Firstly, there is asymmetric spot and futures market volatility in domestic and foreign soybean, the spot price volatility showing a right skew, while the futures price showing a left skew, the volatility of the spot and futures prices fluctuates slowly and the decay rate gradually slows down as the volatility increases. Secondly, the relationship between spot price of imported soybeans, Dalian soybean futures prices and the US CBOT soybean futures prices are more and more strong, indicating that more and more soybean traders also in the spot transactions at the same time through the futures market hedging which increasing degree of participation. Thirdly, the correlation between the domestic soybean spot market,imported soybean spot market, Dalian soybean futures market and the United States CBOT soybean futures market are weak, there has been a serious market segmentation phenomenon, the domestic soybean market independent of the marketization, the abolition of the temporary purchasing and storage system is necessary from the market point of view. Fourthly, China's target price pilot begin in 2014, the domestic market to do the soybean reform, but because of the policy lag, domestic soybean did not show significant market-oriented effect. However, to a certain extent, the market price dominated by soybeans import situation has been eased, but also reduces the degree of soybean futures market in China contain by the US CBOT market. Fifthly, there still has a strong correlation between domestic and foreign soybean futures market.The satisfaction analysis results of the farmers' target price before and after subsidy policy reform show that the earlier announcement time of the target price subsidy policy standard, the farmer satisfaction degree is higher, but the target price subsidy does not satisfy the farmers for many years. In general,farmers are more satisfied with the policy content and planting area verifiable link, but are less satisfied with market price collection and fund redemption.The analysis of the farmers' income change of the target price subsidy of soybean before and after the reform shows that the income level of the farmers in Heilongjiang Province has been improved after the reform of the target price subsidy policy, and the price relationship with the corn has been improved.However, in Jilin, Liaoning and Inner Mongolia provinces, the level of income has been a significant decline, the income level of farmers has not been guaranteed.The subsidy standard of the target price subsidy policy and the welfare analysis results show that:firstly, China's past soybean purchasing and storage policy has played a role to hold the market, if simply abandon the temporary storage policy, it will lead soybean domestic prices decline in production and bring a demand gap. Although the temporary purchasing and storage distorted the domestic market, but also protect the interests of domestic farmers. Change the temporary purchasing and storage system to target price subsidies can ease the domestic and foreign soybean price difference, can reduce the raw materials cost, can conducive to the rational allocation of market resources to promote the downstream industries development. Secondly, with the target price subsidy is 2.4 yuan/kg has a certain stimulating effect on production, it can increase production, lower the domestic market prices, thereby reduce imports. Thirdly,in the implementation of subsidies, the yield subsidies can bring domestic prices and imports have a substantial decline, while the increase in production is relatively large. The reason is the fact that production subsidies will increase farmers' enthusiasm for production and yields.The results of the analysis on the farmers' planting behavior changes before and after the reform of the soybean target price subsidy show that, whether the DID model or the panel data model can be used to obtain the target price subsidy, the farmers' willingness to plant soybean is significantly reduced. This is mainly because farmers as a risk defender of rational people, when the market risk increase , farmers will tend to choose t varieties to cultivate which the risk is not so large. Because soybean target price subsidies have a lot of uncertainty about farmers, so farmers choose to reduce the soybean planting area is basically consistent with rational assumptions.Based on the above conclusions, China should adhere to the soybean market reform continually. At present, China's soybean implements a 3% single tariff market, low-cost foreign soybean enters into Chinese market, lead to China's soybean market fall but the international impact sustainable grow. In particular, since the soybean acquisition in 2008, the ever-expanding domestic and foreign price spreads have shrunk our soybean industry. Against this background, China should adhere to the market-oriented reform to prevent domestic and international price spread due to market segmentation, and guide China's soybean industry to participate in market competition and improve the domestic soybean position.Secondly, the implementation of a stable target price subsidy policy shows great effect. Policy changes will lead to market conditions change,the target price subsidy policy led to China's soybean price fluctuations which affecting the steady development of the soybean market in the year of 2014. A relatively stable policy environment will also make for industrial development. Thirdly, it must improve the soybean market price warning mechanism. There is a large impact on China's soybean from international market, establish soybean data collection system, and improve information dissemination system, release the domestic and international soybean production, consumption, price and other market information timely, farmers and consumers in China could effectively grasp soybean market trends, to ensure reasonable production, guide the scientific consumption and , further safeguard the domestic soybean market stable development.