The Incidence Of China's Rape Direct Subsidies

Rape is an important oil crop in China, about 60 percent of the edible oil takes the rapeseed as raw material. With the enhancement of people's living standards, consumers' demand for edible oil is over-growing. China's existing oil production capacity can not meet the ever-increasing consumer demands. Since 1995, the gap appears between China's edible vegetable oil production and consumption. With the gradual widening gap, since 1998, china's had to rely on a large number of rapeseed and rapeseed oil imports to ensure the domestic edible oil supply-demand balance. However, currently in the European and other regions the demand of rapeseed as raw material for the bio-diesel is over-growing, which lead to the supply and demand adjustment of the international rapeseed market, in this case, China's rapeseed import and edible oil supply are affected. Therefore, in order to reduce the excessive dependence on imports of rapeseed, to ensure China's edible oil security, at the same time, as well as to increase peasants' income, improving their well-being, the government introduced a policy of rape direct subsidies.In this paper, graphical analysis and model solution are the main method. From the economics point of view, expounding the incidence of rape direct subsidies, researching several problems, such as how many subsidies will be got by the farmers eventually; the other share of the subsidies will flow to which links of the industrial chain; as well as what is the main factors impact the distribution of the subsidies, and what is the effect. Eventually come to the conclusion: the rapeseed direct subsidy, which China introduced recently, is a highly efficient agricultural support policy for the rape industry. But the capital of rape subsidies will not be fully translated into the farmers' benefits. Ultimately the financial capital will be distributed among the rape growers, wheat growers, agricultural inputs providers, and rapeseed consumers. And the allocation will be affected by the supply and demand price elasticity of rapeseed, elasticity of substitution between wheat and rape, rape-scale cultivation, the demand share of the rape industry in the agricultural inputs, demand price elasticity of agricultural inputs by the rape industry and so on. Thereinto, the share of the subsidy received by the rape growers decreases with the size of the price elasticity of supply of rape, increases with the demand price elasticity of rapeseed, elasticity of substitution between wheat and rape, rape-scale cultivation, the demand share of the rape industry in the agricultural inputs, and demand price elasticity of agricultural inputs by the rape industry.Ultimately, the paper will give a few policy recommendations on the basis of conclusions. First, in order to maximize the role of the limited financial resources, the government should implement the subsidy policies for the farmers who use the good quality seeds in the rape main producing areas. Secondly, in order to protect the farmers' interests, it's necessary to strengthen the management and supervision for the way of the direct subsidies, release channels, and the status of implementation, so as to ensure the subsidy funds can be got by the farmers totally. Finally, the implementation of subsidy policy should also actively cooperate with other agriculture policies, in order to support the policy of subsidies to achieve better policy objectives.