IDEAS home Printed from https://ideas.repec.org/a/gam/jlands/v13y2024i12p2058-d1533899.html
   My bibliography  Save this article

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

Listed:
  • 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 1-16, November.
    • Handle: RePEc:gam:jlands:v:13:y:2024:i:12:p:2058-:d:1533899
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2073-445X/13/12/2058/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2073-445X/13/12/2058/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Huang, Jikun & Rozelle, Scott, 2006. "The emergence of agricultural commodity markets in China," China Economic Review, Elsevier, vol. 17(3), pages 266-280.
    2. Renkow, Mitch & Hallstrom, Daniel G. & Karanja, Daniel D., 2004. "Rural infrastructure, transactions costs and market participation in Kenya," Journal of Development Economics, Elsevier, vol. 73(1), pages 349-367, February.
    3. Qinghua Wu & Xiaoliang Guan & Jun Zhang & Yang Xu, 2019. "The Role of Rural Infrastructure in Reducing Production Costs and Promoting Resource-Conserving Agriculture," IJERPH, MDPI, vol. 16(18), pages 1-13, September.
    4. Barrett, Christopher B., 2008. "Smallholder market participation: Concepts and evidence from eastern and southern Africa," Food Policy, Elsevier, vol. 33(4), pages 299-317, August.
    5. Zou, Baoling & Mishra, Ashok K. & Luo, Biliang, 2020. "Grain subsidy, off-farm labor supply and farmland leasing: Evidence from China," China Economic Review, Elsevier, vol. 62(C).
    6. Newey, Whitney K., 1987. "Efficient estimation of limited dependent variable models with endogenous explanatory variables," Journal of Econometrics, Elsevier, vol. 36(3), pages 231-250, November.
    7. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    8. Xueqi Wang & Zhongguo Xu & Guan Li & Yuefei Zhuo & Wei Zou, 2023. "Farmland Transfer and Income Distribution Effect of Heterogeneous Farmers with Livelihood Capital: Evidence from CFPS," Land, MDPI, vol. 12(7), pages 1-20, July.
    9. Carletto, Calogero & Corral, Paul & Guelfi, Anita, 2017. "Agricultural commercialization and nutrition revisited: Empirical evidence from three African countries," Food Policy, Elsevier, vol. 67(C), pages 106-118.
    10. Chesher, Andrew & Kim, Dongwoo & Rosen, Adam M., 2023. "IV methods for Tobit models," Journal of Econometrics, Elsevier, vol. 235(2), pages 1700-1724.
    11. Feng Zhao & Pingping Sun & Jie Zhang & Daqing Gong, 2021. "Modeling the Grain Import Trade: A Cointegration Analysis of China’s Panel Data," Discrete Dynamics in Nature and Society, Hindawi, vol. 2021, pages 1-17, October.
    12. Zheng, Linyi, 2024. "Big hands holding small hands: The role of new agricultural operating entities in farmland abandonment," Food Policy, Elsevier, vol. 123(C).
    13. Qin Fan & Vania B. Salas Garcia, 2018. "Information Access and Smallholder Farmers’ Market Participation in Peru," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(2), pages 476-494, June.
    14. Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
    15. Yuanying Chi & Wenbing Zhou & Zhenyu Wang & Yu Hu & Xiao Han, 2021. "The Influence Paths of Agricultural Mechanization on Green Agricultural Development," Sustainability, MDPI, vol. 13(23), pages 1-16, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Makate, Clifton & Angelsen, Arild & Holden, Stein Terje & Westengen, Ola Tveitereid, 2023. "Evolution of farm-level crop diversification and response to rainfall shocks in smallholder farming: Evidence from Malawi and Tanzania," Ecological Economics, Elsevier, vol. 205(C).
    2. Ebata, Ayako & Pacheco, Pamela Alejandra & Cramon-Taubadel, Stephan von, 2015. "Distance to market and farm-gate prices of staple beans in rural Nicaragua," 2015 Conference, August 9-14, 2015, Milan, Italy 211582, International Association of Agricultural Economists.
    3. Laure Latruffe & Yann Desjeux, 2014. "Perpetuation of subsistence farming in Kosovo: the role of farm integration in input markets," Post-Communist Economies, Taylor & Francis Journals, vol. 26(1), pages 137-148, March.
    4. Kuijpers, R., 2018. "The effect of agricultural commercialization on farm household dietary intake: evidence from Ethiopia, Bangladesh, and Rwanda," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277083, International Association of Agricultural Economists.
    5. Montalbano, P. & Pietrelli, R. & Salvatici, L., 2018. "Participation in the market chain and food security: The case of the Ugandan maize farmers," Food Policy, Elsevier, vol. 76(C), pages 81-98.
    6. Olwande, John & Smale, Melinda, 2014. "Commercialization Effects On Household Income, Poverty, And Diversification: A Counterfactual Analysis Of Maize Farmers In Kenya," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170028, Agricultural and Applied Economics Association.
    7. Ebata, Ayako & Velasco, Pamela & von Cramon-Taubadel, Stephan, 2015. "Distance to market and farm-gate prices of staple beans in rural Nicaragua," GlobalFood Discussion Papers 197540, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    8. Gómez, Miguel I. & Ricketts, Katie D., 2013. "Food value chain transformations in developing countries: Selected hypotheses on nutritional implications," Food Policy, Elsevier, vol. 42(C), pages 139-150.
    9. Tesfaye, Wondimagegn & Tirivayi, Nyasha, 2020. "Crop diversity, household welfare and consumption smoothing under risk: Evidence from rural Uganda," World Development, Elsevier, vol. 125(C).
    10. Joachim Vandercasteelen & Seneshaw Tamru Beyene & Bart Minten & Jo Swinnen, 2017. "Secondary towns, agricultural prices, and intensification: evidence from Ethiopia," Working Papers of LICOS - Centre for Institutions and Economic Performance 579601, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
    11. Arnd Kölling & Claus Schnabel, 2022. "Owners, external managers and industrial relations in German establishments," British Journal of Industrial Relations, London School of Economics, vol. 60(2), pages 424-443, June.
    12. Zheng, Yanfeng & Liu, Jing & George, Gerard, 2010. "The dynamic impact of innovative capability and inter-firm network on firm valuation: A longitudinal study of biotechnology start-ups," Journal of Business Venturing, Elsevier, vol. 25(6), pages 593-609, November.
    13. Vigren, Andreas, 2020. "The Distance Factor in Swedish Bus Contracts How far are operators willing to go?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 132(C), pages 188-204.
    14. Adjognon, Serge G. & Liverpool-Tasie, Lenis Saweda O. & Reardon, Thomas A., 2017. "Agricultural input credit in Sub-Saharan Africa: Telling myth from facts," Food Policy, Elsevier, vol. 67(C), pages 93-105.
    15. Robert E. Martin & R. Carter Hill & Melissa S. Waters, 2017. "Baumol and Bowen Cost Effects in Research Universities," Departmental Working Papers 2017-03, Department of Economics, Louisiana State University.
    16. Fujimoto, Takefumi & Suzuki, Aya, 2021. "Do Fertilizer and Seed Subsidies Strengthen Farmers' Market Participation? the Impact of Tanzania NAIVS on Farmers' Purchase of Agricultural Inputs and Their Maize-Selling Activities," 2021 Conference, August 17-31, 2021, Virtual 315044, International Association of Agricultural Economists.
    17. Schumann, Martin & Severini, Thomas A. & Tripathi, Gautam, 2021. "Integrated likelihood based inference for nonlinear panel data models with unobserved effects," Journal of Econometrics, Elsevier, vol. 223(1), pages 73-95.
    18. Hamilton, James D. & Wu, Jing Cynthia, 2012. "Identification and estimation of Gaussian affine term structure models," Journal of Econometrics, Elsevier, vol. 168(2), pages 315-331.
    19. T.E. Uberti & M.A. Maggioni & E. Marrocu & S. Usai, 2023. "The role of localised, recombinant and exogenous technological change in European regions," Working Paper CRENoS 202303, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    20. Stefan Hochguertel & Henry Ohlsson, 2009. "Compensatory inter vivos gifts," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(6), pages 993-1023.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jlands:v:13:y:2024:i:12:p:2058-:d:1533899. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.