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Market liberalization and crop planting decision: a case of China

  • Suwen Pan
  • Jaime Malaga
  • Xiurong He

Purpose – The paper aims to measure the effects of market liberalization on Chinese farmers' crop planting decisions. Design/methodology/approach – The effects are measured using a censored, two-stage, least-square regression. Findings – The results show that the effects of market liberalization on planting decisions are more significant in the case of crops with minimum support price (rice, wheat, and corn) than in the case of crops where planting decision is determined by market prices (cotton and soybean). The effects appear to be different across regions and time zones and more significant in 1993 than in 2005. Originality/value – The result suggests that market liberalization along the past ten years achieved significant effects in Chinese farmers planting decision. This outcome should be taken into consideration when evaluating and implementing future Chinese agricultural policy income-based interventions as a means to meet domestic food security goals and increase farmers' income level.

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Article provided by Emerald Group Publishing in its journal China Agricultural Economic Review.

Volume (Year): 2 (2010)
Issue (Month): 3 (September)
Pages: 240-250

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Handle: RePEc:eme:caerpp:v:2:y:2010:i:3:p:240-250
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References listed on IDEAS
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  1. Harald Tauchmann, 2005. "Efficiency of two-step estimators for censored systems of equations: Shonkwiler and Yen reconsidered," Applied Economics, Taylor & Francis Journals, vol. 37(4), pages 367-374.
  2. Chen, Zhuo & Huffman, Wallace E. & Rozelle, Scott, 2009. "Farm technology and technical efficiency: Evidence from four regions in China," China Economic Review, Elsevier, vol. 20(2), pages 153-161, June.
  3. Cheng Fang & Bruce A. Babcock, 2003. "China's Cotton Policy and the Impact of China's WTO Accession and Bt Cotton Adoption on the Chinese and U.S. Cotton Sectors," Food and Agricultural Policy Research Institute (FAPRI) Publications 03-wp322, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  4. Huang, Jikun & Chen, Chunlai, 1999. "Effects of Trade Liberalization on Agriculture in China: Commodity Aspects," Working Papers 32665, United Nations Centre for Alleviation of Poverty Through Secondary Crops' Development in Asia and the Pacific (CAPSA).
  5. Wang, Zhi, 1997. "The Impact of China and Taiwan Joining the World Trade Organization on U.S. and World Agricultural Trade: A Computable General Equilibrium Analysis," Technical Bulletins 184382, United States Department of Agriculture, Economic Research Service.
  6. J. Scott Shonkwiler & Steven T. Yen, 1999. "Two-Step Estimation of a Censored System of Equations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(4), pages 972-982.
  7. Yen, Steven T. & Lin, Biing-Hwan, 2004. "A Sample Selection Approach To Censored Demand Systems," 2004 Annual meeting, August 1-4, Denver, CO 20082, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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