A Study On The Decision-Making Behavior Of China Peasents Households At Agricultural Production Factors

Peasant households play an important role in agricultural production as household units. Principles of economics tell us that farmers pursue the aim of profit maximization when they make decisions about production and plantation as rational individuals. Based on this hypothesis, farmers tend to take the influence of factors’ price into fully account when making decisions of the input of agricultural factors, make quick and accurate respond to the fluctuation of price, adjust the amount of input to minimize the cost of agricultural input. However, in practical agricultural production process, there is a phenomenon that farmers are not price-sensitive to some certain factors while making decision of agricultural factors input. No matter how the price fluctuates, farmers tend to throw a fixed amount of agricultural factors. This phenomenon exists for a reason, but what are the reasons? Is it because former researches ignore some important hypothesis or the farmers are affected by some other influences which haven’t been paid enough attention to.Agricultural production factors includes seeds, fertilizer, pesticide and so on which will be invested in different growth phases and play different role in the whole growth process. To clarify the problem, this paper take fertilizer as an example out of all the agricultural production factors and try to analyse this phenomenon from the perspective of farmer households.In consideration of the difference of method and amount of applying fertilizer on different kinds of crops, this paper choose peasant households which only grow rice as sample units to avoid differentiation, apply the data from China Center for Rural Research which includes2004-2010,build the econometric model. According to the Hausman test, this paper analyses the decision-making behavior of peasant households by fixed effects model quantitively and got the result that most affective factors includes the type of peasant households, agricultural labor, rice planting area, the price and fee of agricultural machinery, the cost of seed and so on, among which the price of fertilizer appears no significance, verifies the hypothesis this paper brought up earlier. Meanwhile, in order to illustrate the problem farther more, this paper divide the whole sample into two parts separately by scale and type of peasant households,analyses it by regression, the result shows that the price of fertilizer stays insignificance but with different level of sensitivity.Based on the conclusion above, in order to realize the aim of increase production, this paper proposes that the government optimize the price subsidy for fertilizer since the current fertilizer subsidy only includes price subsidy and could only help increase income but not production; meanwhile, farmers calculate the pure amount of fertilizer, this paper suggests that the government enhance the transfer of rural labor to realize the land scale reward and formulate policies from the perspective of agricultural technology, and finally help realize the goal of increasing production and income.