Do Farm Subsidies Effectively Increase Grain Production? Evidence from Major Grain-Producing Regions of China

Abstract

The purpose of this paper is to investigate the impact of agricultural subsidies on grain production in major grain-producing regions. We use an empirical model and data from fixed observation points in rural areas collected by the Ministry of Agriculture and Rural Affairs in 2016–2017. Our findings show that agricultural subsidies in major grain-producing regions have significantly increased rural household grain yield. Furthermore, findings show that agricultural subsidies and the cost of fertilizer and pesticides for rural households have a mediating effect on grain production. In addition, the effect of agricultural subsidies varies by type: income subsidies have a greater promotion effect on grain production, whereas subsidies for purchasing agricultural machinery have no significant promotion effect on grain production. These findings show that agricultural subsidies promote grain production in China’s major grain-producing regions, and have a mediating effect on different types of subsidies.