The Impacts Of Agricultural Subsidy Policy On Wheat Production | | Posted on:2022-07-11 | Degree:Doctor | Type:Dissertation | | Institution:University | Candidate:Buyannemekh Puntsagdorj | Full Text:PDF | | GTID:1489306515959369 | Subject:Agricultural Economics and Management | | Abstract/Summary: |  PDF Full Text Request | | Wheat production is one of the most supported sectors in Mongolia.It is the main food staple and a strategic product that ensures food security and the country’s self-sufficiency under the Mongolian Food law and the National Security law.In order to restore previously declining wheat production and ensure to meet the demand,coupled cash payments and other subsidies for production inputs and investment in machinery have been provided since2008.Besides,given the substantial amount of public resources dedicated to the support program and an implementation lasting more than a decade,its impacts on wheat production are still unclear.Currently,Mongolia is in a period of transitioning from an intensive to the sustainable agriculture system.Therefore,the requirements are arising to evaluate the effects of the current subsidy policy on wheat production and seek ways for further policy reforms.The main objective of the study is to investigate the impact of subsidy policy on the wheat sector production in the Mongolian case and propose possible recommendations for further development on the subsidy policy.The study has investigated the impacts of various types of subsidies on the farmers’ production input decision,production efficiency,and farmers’ sustainable farming behavior(identified by the adoption of sustainable agricultural practices(SAP)).The subsidy types covered in this research are the cash incentive based on wheat output,the soft loan subsidy for production input /seed,fertilizer,pesticide,fuel/purchase and the soft loan subsidy for investment in machinery.The study uses both primary and secondary farmer-level data.Depending on the purpose and nature of the analyses,two scopes of datasets are used.The first is the cross-sectional data covering 239 farmers in 4crop regions in 2018.The second is the unbalanced panel data for 2013-2018,covering 163 farmers from the Central arable region.The primary data were collected through a questionnaire between November and December 2018 and between May and July 2019,respectively.As of 2019,a total of 886 farmers were growing wheat nationwide,and the structure of the farmers by land size in our study sample was close to that of the population.Following our conceptual and analytical framework,different econometric techniques were conducted.The analysis of the impacts of subsidy policy on production input decisions for wheat farmers was conducted,using the regression analyses such as panel regression estimated by random effect,the Tobit regression estimated by maximum likelihood.The 4component time-varying specification of Stochastic frontier analysis(SFA)is used to measure farmers’ technical efficiency(TE)levels and analyze the impact of subsidy policy on the TE.To explore the impacts of subsidy on the adoption of farmers’ sustainable farming practices,generalized structural equation modeling(GSEM)is employed under the protection motivation theory(PMT)framework.Moreover,the farmers’ judgment toward the current subsidy policy is assessed based on the survey questions.Our findings show that the subsidy policy has contributed to the growth of production inputs.The output-based cash payment and supports for capital investment contributed to the increase of land size to cultivate.At the same time,the support for inputs had a significant positive effect on fertilizer use per hectare,and the support for capital investment increased promoted the upgrade of machinery and equipment significantly.The stochastic production function results indicated that wheat sown area,seed use and labor were the main driving inputs for production growth,while the fertilizer use was negatively correlated.The findings of the efficiency analysis reveal that the overall yearly average TE over the period 2013-2018 was0.6(varied between 0.573-0.654),while the scale efficiency(SE)was near to constant returns to scale and no significant changes in technology were observed.The persistent TE was 0.778 and the average time-varying TE was 0.765.These components have different policy implications.Both the direct payments and soft loans for inputs had a significant and positive effect on the farm’s overall TE.In terms of other determinants of TE,the off-farm income,wheat share in farming operations and natural conditions were found to have significant impacts.Further findings show that the current subsidy policy did not affect the farmers’ decision to apply sustainable techniques.The other variables that have a significant impact were the information and knowledge of the farmer about SAP,the soil conditions in which the farmer was cultivating,and the farmers’ perceptions toward the severity of soil erosion and the efficacy of SAPs.The results presented in this study reveals that the subsidy policy has a significant impact on farmers’ production decisions and sustainable behavior.Although subsidies increase the farmers’ potential to use more inputs,thereby leading to production growth,the optimal use of these inputs needs to be considered.Besides,the subsidy has positively affected the TE levels;there is still room to increase the output by 40% by improving TE without increasing production input.The government agricultural policy and subsidy policy should be linked to exploring the roots and eliminating inefficiencies.The wheat production in Mongolia is still following conventional farming that the output quantity growth depends on the sown area size and labor.This labor and land-intensive production needs to be changed using the latest innovations and technological upgrades in order to increase productivity.In addition,at a time when sustainable development is prevalent in all aspects,policy changes should also be aimed at promoting a sustainable approach.The possible main measures for these policy implications above could be ensuring farmers’ knowledge and awareness toward efficient and sustainable production,promoting the use of research results by developing the government-research institutes-farmer collaboration.Lastly,the subsidy policy needs to be modified to promote and direct the farmers toward the desired outcome,such as changing the subsidy basis from output growth to efficiency or sustainability requirement,extending the current monetary subsidy form by including non-monetary subsidies /extension services,training/. | | Keywords/Search Tags: | wheat production, impacts, subsidy policy, case analyses, Mongolia | | PDF Full Text Request | Related items |
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