The Economic Effects Of The Policy Of Direct Subsidies To Grain In Shandong Province

While repealing grain tax, the country began the introduction of direct subsidies tofarmers. This has once again created a historical precedent. Shandong Province is thelargest province of the food production and consumption. The analysis of the policyimplementation of direct subsidies to grain is conducive to safeguarding the nation’sfood security. Shandong Province has implemented direct subsidies to farmer since2004. And it implemented agricultural general direct subsidies in2006. Year after yearit increased the intensity of direct subsidies, which played a positive role in increasinggrain production and promoting farmers’ income. At the same time, there have been aseries of problems, such as too single way of subsidies, subsidy structure is irrational,false data, etc. which threatened the farmers’ and national interests to some extent.This article conducts theoretical analysis, including a discussion of related concepts,the need for direct grain subsidies and target; after that it analyzes the status of theimplementation of the subsidy policy in Shandong Province, including direct effectand chain effect of direct grain subsidies to produce. The direct effect of the section,including prior to the implementation of the positive role in the post-implementationsatisfaction survey and implementation, as well as facing the inflection point problem;Chain effect on non-food crops analysis. Then it conducts empirical about threefactors, it use data of the overall direct subsidies amount from2004to2010inShandong Province and farmers’ income and grain prices, and analysis of the results;Finally, it proposes recommendations for improve the grain subsidy policy and drawsconclusions. The main conclusions are as follows:(1) It analyzes and compares the situation prior to the implementation of thegrain direct subsidy policy with the situation after the implementation in ShandongProvince,it draw a conclusion that the grain direct subsidy policy has a positiveimpact on grain production, grain acreage and farmers’ income in Shandong Provinceby comparative and induction method. Meanwhile, grain direct subsidy policies inShandong Province is faced with the problem of inflection point. The contributionrate of implementation of the grain direct subsidies policy to farmers’ income reflectsit. (2) This paper truly reflects the effect of the implementation of the direct grainsubsidy policy by the survey method. Satisfaction questionnaire data reflect thefarmers’ satisfaction degree for the implementation of the grain direct subsidies policyand highlight the deficiencies of the grain direct subsidy policy at the same time.(3) Implementation of the grain direct subsidy policy is not a single, in additionto its effect on the grain directly factors, but also indirect effects of non-grain crops.At first, the paper proves that the grain direct subsidies and non-food crops havecausal relationships by using Granger causality test. Then it uses data from2004to2010to analyze and draw a conclusion that the grain direct subsidy policy indirectlyreduces the acreage and production of non-food crops.(4) The empirical analysis shows a positive relationship from direct grainsubsidies to grain production and farmers’ income and food production but thecorrelation coefficient is relatively poor, which means little effect. The conclusion isto continue to increase the intensity of the direct grain subsidies and to increase theamount of direct grain subsidies. As for the relationship of the implementation of thefood direct subsidy policy on food prices, it does not match the theory. In contrast, itplays the role of the accelerator.(5) For problems arise in the implementation process of the grain directsubsidies policy in Shandong Province and the conclusions in the empirical analysis,this paper presents the proposed measures accordingly.