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How Does China’s Agricultural Subsidy Policy Drive More Commercially Productive Small Farmers? The Role of Farmland Scale, Labor Supply, and Cropping Structural Change

Author

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  • Jian Zhang

    (Research Center for Land Use and Ecological Security Governance in Mining Areas, China University of Mining and Technology, Xuzhou 221116, China)

  • Awais Jabbar

    (College of Economics and Management, Three Gorges University, Yichang 443002, China)

  • Xin Li

    (Research Center for Land Use and Ecological Security Governance in Mining Areas, China University of Mining and Technology, Xuzhou 221116, China)

Abstract

This study investigated the impact of China’s agricultural subsidy policy on farmers’ commercial production, indicated by sales market participation. A nationally representative survey data, panel Tobit model, IV Tobit model, and the Correlated Random Effects (CRE) approach were used. The findings reveal that farmers receiving agricultural subsidies have improved crop sales’ share of total output value. Mechanism analysis reveals that agricultural subsidies have driven up farmland scale and increased agricultural labor supply in production, incentivizing the motive for profit maximization among farmers. Meanwhile, agricultural subsidies also encourage farmers to cultivate more grain crops. Policymakers should continue deepening the reform of agricultural subsidies and promoting farmer specialization and commercial production. Moderate-scale operation of farmland should be one of the targets of agricultural subsidies.

Suggested Citation

  • Jian Zhang & Awais Jabbar & Xin Li, 2024. "How Does China’s Agricultural Subsidy Policy Drive More Commercially Productive Small Farmers? The Role of Farmland Scale, Labor Supply, and Cropping Structural Change," Land, MDPI, vol. 13(12), pages 1-15, November.
    • Handle: RePEc:gam:jlands:v:13:y:2024:i:12:p:2058-:d:1533899
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    References listed on IDEAS

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