An Empirical Study On The Effect Of China's Minimum Grain Purchase Price Policy

"Food is the first necessity of people".It is the necessary commodities in our daily life.What's more,food is the strategic materials to maintain national economic development and political stability.Over the recent decades,although China's total grain output is on the rise,but total food consumption has shown a rapid upward trend due to the improvement of citizens' living standards.According to National Bureau of Statistics of China,in the year 2015,China's net grain imports exceeded 120 million tons,and grain self-sufficiency rate fell below 85%.Meanwhile,due to the inadequate domestic land resources,worse environment,agricultural population transfer and other aspects,grain production has shown a low growth rate.Therefore,China's grain supply security is facing great challenges.In order to guarantee farmers' interests and country's grain supply security,Chinese government has enforced diverse relating measures.Since 2004,China has implemented the minimum price policy of grain purchase in several main grain producing areas.However,whether this policy can really raise farmers' enthusiasm on grain farming and relevant grain production is still questioned by some political and academic experts.The current research is mainly qualitative and theoretical analysis.Moreover,quantitative analysis is less and relevant data is lagging behind(basically before the year 2012).It cannot reflect the new situation that minimum grain purchase price is no longer rising and grain production is no longer rising or even declining from 2013.Thus,it is meaningful to do the systematically empirical analysis of this problem.Secondly,improving grain production efficiency and accelerating technological progress is of great importance for Chinese agricultural development at this stage.Whether this policy can raise agricultural income and investment so as to improve production efficiency and accelerate technological progress,the current academic research does less empirical analysis on this issue.On the basis of above statements,the thesis empirically analyzes the effect of the policy implementation on above two issues from different aspects.It uses PLSR(Partial Least Squares Regression)method to solve multicollinearity and small sample amount problems among historical data.The thesis analyzes effecting factors on grain farming behavior.What's more,the thesis uses DID(Difference-In-Differences)model among panel data to analyze the effect of the policy on raising grain production and pushing technological advancement via comparison of control group and treatment group,as well as erasing other factors.On these basis,the thesis puts forward relevant policy suggestions for the further development of grain security.In Chapter 4,the thesis uses PLSR(Partial Least Squares Regression)method to analyze effecting factors on grain farming behavior by the relevant data from the year 1900 to 2015 of wheat.It shows that the grain purchase price acts as the most significant and influential factor.Regardless of other factors,the wheat planting is growing at an average of 0.19%for every 1%increase in wheat prices,which has a large stimulating effect on wheat cultivation considering the inertia and large base of wheat cultivation.Farmers' wage income level and consumption level have a negative effect on wheat cultivation,while wheat planting net profit has a positive effect on wheat cultivation.In Chapter 5,basing on the wheat production data of 13 major producing provinces from year 2000 to 2015,the thesis uses DID(Difference-In-Differences)model of panel data to study the effect of the policy on grain yield and productivity advancement.It shows that the policy can obviously increase the total grain output.This policy can increase total wheat production by 14.3%during ten years of its enforcement without regarding other factors.Secondly,on the aspect of production efficiency,the policy can also obviously increase wheat yields and reduce production costs.These indicate that the policy can technological progress.Farming area has the greatest influence on the total grain output;Mechanization level,material input can also obviously increase the total output and production per unit area.Finally,the thesis also shows that the minimum purchase price has positive effect on grain production without considering other factors under the premise of the wheat purchase price.Each 1%increase in wheat total output will increase by 0.267%.Through these two aspects of the analysis,we can find that the grain purchase price has an important impact on grain planting behavior.The minimum purchase price policy can not only increase total grain output,but also improve production efficiency and technological progress.