Analysis Of The Impact Of Agricultural Subsidy On Household Farmland Transfer Behavior

Small-scale agriculture under the current existing institution hinders the improvement of agricultural efficiency and farmers’ income, while farmland transfer have economy of scales effect, trading profits effect and marginal output leveling effect, which means it is a highly effective way to optimize resources configuration and improve the land operating efficiency. It is just because of this contradictory reality in agricultural industry, the agricultural policy started to encourage farmland transfer. In this context, both the scale and scope of farmland transfer in rural China are constantly expanding. Improving rural incomes and advancing the development of modern agriculture through land use efficiency improvement and resource allocation optimization has become a consensus in academia and government sectors. Meanwhile, the central government increases the intensity of subsidy year by year, and agricultural subsidy has become one of the most important agricultural policy initiatives in recent years. Agricultural subsidy can be beneficial in different aspects, for instance, further boosting food production, increasing farmers’ income, safeguarding food security in China etc.The exploration of possible effects of agricultural subsidy on farmland transfer market has abundant research values and practical significance. If agricultural subsidies can promote farmland transfer, then both the large scale agriculture operation and the element resources allocation can be optimized; otherwise, if agricultural subsidy pose negative effects on farmland transfer, then the problems and challenges of agriculture will be intensified. Now, the rapid increasing of agricultural subsidies in China makes it possible for us to explore its impacts on farmland transfer. This paper, taking three typical villages from northeast Jiangxi province as cases of research, based on a three-year (2000,2005 and 2010) panel data, explores the impacts of agricultural subsidies on the household farmland transfer behavior through Probit model and Tobit model, which focuses on farmers’renting in and renting out behavior. Specifically, whether farmers join land rental market and the impacts on land transfer areas.Finally, this paper summarizes the results and puts forward corresponding policy recommendations.This paper consists of five chapters. The first chapter introduces the topic of this article as well as the objectives and specific content of this paper. At the same time, chapter 1 described research methods, technology roadmap, and innovation and shortcomings of this paper. The second chapter is about the literature review and theoretical foundation of the paper. Theoretical foundation includes household economic behavior theory and transaction cost theory while literature review includes the status quo of agricultural subsidy and farmland rental market," the influence of agricultural subsidy on land transfer, and other relevant factors affecting farmland rental market. Chapter 3 is the statistical description of the research area, which includes farmland transfers and agricultural subsidy details and the possible correlation between them are explored. The results show that form 2000 to 2010, with the increasing of agricultural subsidy, the land transfer rate fluctuated (increase after a decrease). Specifically, the rate of farmland renting in decreased from 2000 to 2005 and then increased from 2005 to 2010, but the increase extent is much smaller than the decrease extent. Worth to note is that the farmland renting out rate kept increasing during the whole period. Chapter 4 is the econometric analysis of the impacts of agricultural subsidy on farmland transfer. Probit model and Tobit model are used based on a three-year panel data (2000,2005 and 2010) to explore the possible effects of agricultural subsidy on household farmland transfer behavior. The results indicate that agriculture subsidy exerts negative effects on farmland renting in, while it has no significant effects on the renting out of land. Chapters 5 summarizes the study results and proposes corresponding policy recommendations based on the above study findings, including: (1)Agricultural subsidy policy should be better targeted:since decoupled subsidy can rarely boosts the enthusiasm of farmers’ agricultural operation, it is advisable to treat the current agricultural subsidy as farmers income support policy. The goal of stimulating agricultural operation means price supports is necessary, so as to improve agricultural income, stimulate the enthusiasm of agricultural operation and ensure the security of food safety. (2) Agricultural policies should be better coordinated:Since the overall agricultural subsidy exerts negative effects on farmland renting in, another round of subsidy specifically for large-scale agriculture operators can be considered, which can stimulate the renting in of farmland, further activate the farmland transfer market, improve agriculture efficiency and ensure the food safety in China. (3)Policy feedback mechanism should be improved:the field survey data shows that there exists discrepancy between farmers’ actual contracted farmland and farmland areas which receives subsidy. If agricultural subsidy continues to be provided based on the areas of 2004 and ignores the constant changing of population, economy and society, the effectiveness of the policy will be declined. Since it is too costly to investigate farmers’ real planting areas every year, it is reasonable to conduct surveys every few years so as to update the information of farmers’ planting areas. The feedback of a policy is helpful for the betterment of the policy, and the equity of subsidy can also be warranted by this way.