Knowing and Doing: The Perception of Subsidy Policy and Farmland Transfer

Farmland transfer is conducive to the rational allocation of farmland resources and scaling of agricultural production in China. The Chinese government launched a pilot program to subsidize moderate-scale farmland management in 2016, yet the perception of the program and its effects are rarely empirically tested using micro-level data. Using data on 523 households extracted from a rural household survey, the Probit and Tobit model results determined a significant positive impact of the perception of moderate-scale subsidies on both farmland transfer behavior and farmland transfer area. If the household knows about the moderate-scale subsidy policy, then it is 19.2% more likely to have moderate-scale land endowment, and the household has 17.626 ha more inflow land than that who do not know the policy. The results show that only 5% of the households know the moderate-scale subsidy policy, thus hindering the process of farmland transfer. Additionally, high levels of educational attainment and non-agricultural income promote farmers’ decisions to transfer farmland and to expand farmland areas for moderate-scale households. However, age, household size, the family dependency ratio, and non-agricultural labor are obstacles to farmland transfer. The findings imply that the government should adopt a more effective policy transmission mechanism to increase the proportion of knowing the subsidy policy for both small-scale and moderate-scale households.