Investigating the Impact of Grain Subsidy Policy on Farmers’ Green Production Behavior: Recent Evidence from China

Abstract

This paper investigates how grain subsidy policy (GSP) in farmland transfer affects farmers’ green production behavior (FGPB) for promoting green agricultural development and improving grain subsidy policy. In this study, we used the data of the China Household Finance Survey (CHFS, 2015) and applied the Probit model to discover the impact and mechanism of the GSP on FGPB in farmland transfer. In addition, we also analyzed the mediating effect of farmers’ credit constraints and the moderating effect of farmers’ risk tolerance. The results show that, firstly, grain subsidy to the actual operator of the farmland generally promotes farmers’ excessive fertilizer application behavior, while there is no significant effect on farmers’ excessive pesticide application behavior. Secondly, the mediating effect of farmers’ credit constraints on the impact of GSP on FGPB is not significant. Thirdly, farmers’ risk tolerance plays a significant moderating effect in the impact of GSP on farmers’ excessive fertilizer application behavior. Finally, GSP mainly promotes excessive fertilizer application behavior among farmers in Eastern China.