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Effectiveness and Sustainability of Grain Price Support Policies in China

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  • Jie Lyu

    (School of Agricultural Economics and Rural Development, Renmin University of China, Beijing 100872, China)

  • Xiaolei Li

    (College of Economics and Management, Huazhong Agricultural University, Wuhan 430070, China)

Abstract

We evaluated the effectiveness and sustainability of the grain price support policies in China using the structural break regime switching model. Based on the rice, wheat, and corn monthly price data from 1987 to 2017, we provide strong evidence that the Chinese grain price support policies have been effective in stabilizing the domestic grain price. A structural change occurred in grain price patterns in 2004 when the price support policies were established. Since then, Chinese grain prices have followed a regime with significantly lower volatility. We documented several problems challenging the sustainability of the Chinese grain price support policies in the future, including high economic costs that can trigger high support prices, high public stock level, and high grain import pressure. Our findings shed new light on the functioning of the grain pricing policies and provide useful implications for the market-oriented reforms in the Chinese grain market.

Suggested Citation

  • Jie Lyu & Xiaolei Li, 2019. "Effectiveness and Sustainability of Grain Price Support Policies in China," Sustainability, MDPI, vol. 11(9), pages 1-13, April.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:9:p:2478-:d:226421
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    1. Jin, Yan & Gardebroek, Cornelis & Heerink, Nico, 2021. "Price Responsiveness of Rice Farmers and the Probability of Effective Grain Support Policies in China," 2021 Conference, August 17-31, 2021, Virtual 315097, International Association of Agricultural Economists.
    2. Gönül Sevinç & Mustafa Hakkı Aydoğdu & Mehmet Cançelik & Mehmet Reşit Sevinç, 2019. "Farmers’ Attitudes toward Public Support Policy for Sustainable Agriculture in GAP-Şanlıurfa, Turkey," Sustainability, MDPI, vol. 11(23), pages 1-14, November.
    3. Jin, Yan & Gardebroek, Cornelis & Heerink, Nico, 2023. "The Impact of Chinese Rice Support Policies on Rice Acreages," 97th Annual Conference, March 27-29, 2023, Warwick University, Coventry, UK 334550, Agricultural Economics Society - AES.
    4. Guerrero-Ortiz, Pilar Lourdes & Palacio-Muñoz, Víctor Herminio & Leos-Rodríguez, Juan Antonio & Ocampo-Ledesma, Jorge Gustavo, . "Precios de Garantía en México (2019-2020): diseño e implementación de política agrícola," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 21(02).
    5. Min Su & Nico Heerink & Peter Oosterveer & Tao Tan & Shuyi Feng, 2021. "Impacts of China’s Minimum Grain Procurement Price Program on Agrochemical Use: A Household-Level Analysis," Agriculture, MDPI, vol. 11(10), pages 1-20, September.

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