Abstract
China has a low per-capita availability of arable land. The proportionate revenue generated by grain production has seen a modest increase in contrast to the general progress of the entire country. Since 2004, the Chinese government has openly adopted agricultural subsidy programs to stimulate the enthusiasm of small farmers for cultivating grain. During the early stages of policy implementation, it has a major impact on grain yield, but its impact is reducing. The four-period panel data from the CRHPS are used to empirically investigate the link between agricultural subsidies and non-grain production of cultivated land (NGPCL). The study is carried out to empirically examine Marx’s theory of absolute rent in order to understand the factors that contribute to the weakening of the impact of agricultural subsidy policy. The findings suggest that while the impact of agriculture subsidy policy is decreasing, it still hinders the expansion of the NGPCL. Agricultural subsidies impede the movement of farmers from the agricultural sector to other industries by impacting the fixed rent paid for cultivated land. This, in turn, promotes the persistence of the NGPCL, which could be a significant factor in reducing the effectiveness of agricultural subsidy policies. For households where the householder is in better health, agricultural subsidies inhibit the NGPCL more effectively. At various stages of the family life cycle, agricultural subsidies have a similar impact on the NGPCL. In addition, further study indicates that increasing the precision of agricultural subsidy policy could contribute to a greater impact of agricultural subsidies on the NGPCL. According to the conclusion of the research, we propose the optimal direction for China’s agricultural subsidy policy.
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Data availability
The data are no longer available. However, the data that support the findings of this study are available from Zhejiang University. Restrictions apply to the availability of these data, which were used under the license for this study. Data are available at http://ssec.zju.edu.cn/sites/main/template/news.aspx?id=51026 with the permission of Zhejiang University. The data will be available on request.
Notes
Data source: https://topics.caixin.com/2015-03-04/100787697.html.
In fact, since the central government suggested the reform policy of separating rural land ownership, contract rights, and management rights, the pace of farmland transfer has quickened dramatically.
According to the China Rural Statistical Yearbook in 2021, it takes 4.4 days of labor per mu to produce the three main grains, 10.9 days, 24.2 days and 37.2 days to produce cash crops such as cotton, sugar beet and apple, respectively, which is about 2–8 times that of grain crops.
There is also the possibility that small farmers will move all of their farmed land and cease agricultural output. However, because this is not within the purview of this paper’s individual level discussion of the NGPCL, it is not taken into account.
Ji and Zhang (2022), research demonstrates that for every 100 yuan increase in agricultural subsidies, the probability of farmers purchasing all agricultural machinery services rather than labor increases by 0.08%, the probability of partial purchase increases by 0.04%, and the probability of no purchase decreases by 0.12%. Since the amount of agricultural subsidies is logarithmic in this paper, the marginal utility derived is presented as a percentage; therefore, it is considered to replace the current form of agricultural subsidies’ marginal utility. According to CRHPS data, an average peasant household received 466.66 yuan in agricultural subsidies, and agricultural subsidies climbed by 100 yuan, or 21.43%. The likelihood of farmers planting just grain crops grew by 0.5165%, the likelihood of farmers partially planting grain crops reduced by 0.4479%, and the likelihood of farmers not planting grain crops decreased by 0.0694%. Therefore, two kinds of policy effects of agricultural subsidies are measured and compared: (0.5165%+0.4479%+0.0694%)÷(0.08%+0.04%+0.12%)=4.3075.
It is worth noting that while farmers may exhibit farmland abandonment behavior, the areas of cash crops planted by farmers also contain farmland abandonment zones. However, because agricultural abandonment is also a type of NGPCL, the measurement has no effect on the key connotation of NFUCL, and the conclusion remains compelling.
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This research was funded by The National Natural Science Foundation of China Youth Program, grant number 71804196.
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Pan, S., Di, C., Qu, Z. et al. How do agricultural subsidies affect farmers’ non-grain cultivated land production? Evidence from the fourth rural Chinese households panel data survey. Econ Polit 41, 1–24 (2024). https://doi.org/10.1007/s40888-024-00332-3
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DOI: https://doi.org/10.1007/s40888-024-00332-3