Policy Research On The Minimum Grain Purchase Price In China

It is always the top priority of the government work to protect farmers’ income from growing grain,promote the stable development of grain and national food security. Since the21st century, the PartyCentral Committee has paid unprecedented attention to “Three Rural Issues” and made a basic policy ofindustry nurturing agriculture and cities supporting rural areas. The government has graduallyestablished an agricultural subsidy system and implemented the minimum grain purchase price policy asthe core of a series of subsidy policies. In the context of these policies, this dissertation launchesresearch work with the minimum grain purchase price policy as the core proposition.First of all, the dissertation reviews the adjustment process of grain policy since the founding ofPRC in order to tease out the evolution trajectory of grain policy, and clarifies the origin of theminimum purchase price policy. Secondly, based on economics perspective, the dissertation analyzesthe basic characteristics of grain and the minimum grain purchase prices, explains the necessity andrationality of financial subsidies on grain. Furthermore, this dissertation empirical analyzes the systemdesign of the minimum grain purchase price policy, current situation and existing problems. Then, thisdissertation selects four varieties including white wheat, early rice, late indica rice, japonica to test propeffect of the minimum grain purchase price policy using Auto-Regressive Moving Average model(ARMA). The results show that the minimum purchase price policy significantly reduces pricefluctuations of white wheat, early rice and late indica rice. It is quite significant that the minimum pricepolicy on these three grains have the prop effect on market, but prop effect on market of the japonicawas not significant. In addition, this dissertation summarizes experience of agricultural subsidies policyof main developed countries including the United States, European Union, Japan and South Korea inorder to learn. Finally, based on research conclusions, this dissertation put forward some concreteproposals to improve the existing policy so as to provide reference for decision-makers.Based on these research conclusions, the dissertation put forward four policy suggestions. Firstly,the government should adjust current pricing mechanism of the minimum purchase price and try toadopt a new pricing method to replace the old method. It is that the government determines a purchaseprice range and then determines the minimum grain purchase price in this range based on marketconditions. Secondly, according to the market situation, the government should further improve theminimum purchase price policy and appropriate adjustment policies coverage in order to increase policyflexibility. Thirdly, the government should continue to deepen the grain circulation system ofmarket-oriented reforms, maintain fair competition in the market and cultivate a wide range of grainmarket business entities. Fourthly, the government should improve the minimum grain purchase pricesas the core of the system of agricultural subsidies, meanwhile, actively explore the establishment offarmers’ income subsidies as the core of agricultural subsidies system so as to maximize the ease thenegative effects of agricultural subsidies policy on the market mechanism.