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Inflation And Grain Stocks Of Farm Households: Why Don’T Farmers Store Grain As Before?

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  • Zhang, Ruijuan
  • Wu, Laping
  • Carter, Colin A.
  • Sun, Dingqiang

Abstract

This paper empirically addresses how inflation rates affect China’s private grain stocks.Storable grain is characterized as a capital asset. Farm households would choose either to store grain or to sell grain to get bank deposits. We first build a farm household model in which real interest rates can alter farmer’s grain storage behavior. Using household survey data collected in Hebei province, China from 2004-2009, we empirically test the theory. Our estimates show that inflation rates significantly and negatively affect private grain storage. This finding provides an alternative explanation for the decline in private grain stocks since 2004 in China.

Suggested Citation

  • Zhang, Ruijuan & Wu, Laping & Carter, Colin A. & Sun, Dingqiang, 2013. "Inflation And Grain Stocks Of Farm Households: Why Don’T Farmers Store Grain As Before?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150614, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea13:150614
    DOI: 10.22004/ag.econ.150614
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    References listed on IDEAS

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    1. Buschena, David E. & Smith, Vincent H. & Di, Hua, 2005. "Policy reform and farmers' wheat allocation in rural China: a case study," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(2), pages 1-16.
    2. Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October.
    3. Albert Park, 2006. "Risk and Household Grain Management in Developing Countries," Economic Journal, Royal Economic Society, vol. 116(514), pages 1088-1115, October.
    4. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399, September.
    5. Anderson, Jock R. & Dillon, John L. & Hardaker, Brian, 1977. "Agricultural Decision Analysis," Monographs: Applied Economics, AgEcon Search, number 288652, November.
    6. Shenggen Fan, 1991. "Effects of Technological Change and Institutional Reform on Production Growth in Chinese Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 266-275.
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    Keywords

    Consumer/Household Economics; Crop Production/Industries; International Relations/Trade;
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