| The purpose of this dissertation is to examine the impact of government fertilizer policies as well as factor market restrictions on a Chinese farmer's fertilizer utilization, focusing on a period when the farmer's economic environment has been complicated by a mixed economy of planning and free markets. A farming systems model was constructed which incorporates substitutional possibilities between chemical and organic fertilizers as well as between high- and low-grade chemical fertilizers, such as urea and ammonia bicarbonate (ABC). Coefficients for this linear programming model have been derived from a farm household survey data set collected in central Jiangsu Province in 1988-89. A series of policy experiments were conducted to examine separately the impact of government policy intervention and factor market imperfections on the farmer's decisions. Major findings can be summarized as follows. (1) Government fertilizer policy alone currently has little impact on the farmer's decisions on fertilizer application. In fact, the quantity of subsidized fertilizer is too small to have significant effects on fertilizer usage and crop production. Distribution of the subsidized fertilizer, however, has a negative impact on income distribution among farmers. Policies have been formulated to provide farmers in rich areas with relatively large quantities of subsidized fertilizer, while poor farmers receive little or no subsidies. (2) In sharp contrast, changes in opportunity cost of labor associated with access to off-farm employment play a pivotal role in farmers' fertilizer utilization, through substitutions between chemical and organic fertilizers as well as between urea and ABC. Unequal access to off-farm employment is the most powerful explanation for the observed variations in fertilizer utilization across households. In light of these findings, government plans for fertilizer distribution, imports, and domestic production, should include an allowance for the increased demand for fertilizer resulted from rising labor costs in the agricultural sector. |
