Cotton Planting Acreage Decisions Of Chinese Cotton Producing Farmer

The influence of price changes to agricultural production is one of the core issues of the economics of agriculture. The supply theory in economics believes that, if all other conditions remain unchanged, the supply of commodities were decided by the market price. If the price increases, the supply will be increased; if price decreases, the supply will be reduced. Price is the key decision-making signal for producers. Modern economic theory also believes that all producers are rational. There is no doubt that China's farmers are rational economic men also, under market economy conditions, the price should be a key determining factor for China's cotton producing farmers for their cotton planting acreage. With China's market-oriented reform, the response of cotton producing farmers to changes of price should be more and more sensitive, but when we verified the hypothesis that the decision of cotton planting acreage was decided by in the cotton relative expected benefit, we found the influence of the relative prices on the decision of cotton planting acreage is not significant, while the previous decision has great influence on the current decision. In other scholars' studies, we also found that agricultural products prices flexibility is low or not statistically significant. Therefore, the problems we want to study are: In the specific context of China, how farmers make their cotton planting acreage decision, how cotton prices are changed, why the influences of prices changes to farmers cotton planting acreage is of no significant? The answers to these questions will help us to choose correct measures to guide the allocation of resources, and to maintain economic development sustainable and stable.Aimed at the problem we want to study, this paper focuses on China's cotton producing farmers response behaviors to prices changes. On the base of the analysis of the changes in Chinese cotton production, cotton pricing policy, cotton production technological progress, we use the "China Statistical Yearbook", "China's Agricultural Statistics Yearbook", "China's agricultural products cost-benefit compilation of information" and other relevant data to study the cotton producing farmers' cotton planting acreage decision and their adjustment behavior to prices changes in China's 10 major cotton producing provinces. The main contents and conclusions stated as follows:This paper is divided into 10 chapters, including four parts. The first part included the first chapter, described the research question, research objective, the study hypothesis, research methods, research contents, as well as research framework, potential lack and innovation. The second part elaborate related Review of the Literature and the third part is the main part of this paper, the main contents of it are the following:(1) Established a framework for the analysis of this paper. China's farmers are rational economic men whose objective is to maximize the expected return of individual or family through the maximization the expected return from the scarcest factor of production. For Chinese cotton producing farmers, the land is the scarcest factors of production, so the ratio between different crops planting acreage is a best index to measure agricultural producers' will. Farmers' objective is to maximize the expected relative return from per area of land. The expected relative return depends on the relative expected prices and relative expected yield. To simplify the analysis, traditional, on the basis of Cobweb theory, some scholars believed that farmers make their planting acreage decision based on the previous year's price and yield. Actually the yield and price which influence farmers planting acreage decision may be the last year, they also may be a few years ago. In short, farmers will not change their decision until they form a relatively stable expectation in the process of the changes of relative price and yield. But if the price changed frequently, the small-scale farmers may not be able to form a stable expected price. Then the influence of prices on the cotton planting acreage decision may be insignificant.(2) On the three different levels of the national, regional and main production provinces, the paper analyzed the changes cotton production. The paper choose cotton's alternative crops scientifically, integrated them into one alternative crop. And then it studies the main factors which influence farmer's cotton planting acreage decision in China. The main factors which influence farmer's cotton planting acreage decision are the future relative expected return and the previous decisions. The paper also found that the influence of relative expected prices on farmer's cotton planting acreage decision is statistically insignificant. This points a direction for our further research.(3) Introduced the cotton and cotton production as well as it's changes since China's reform and opening up, technological progress in the cotton production, and then analyzed the changes of relative yield and relative price of the different levels of cotton production at different times using statistics methods. Based on the above analysis, this paper established an econometrics model to analyze the acreage adjustment behavior of farmers. We found that farmers acreage adjustment behavior depends on the trend of prices changes, if the price changes have a clear trend, fanners can draw is relatively stable, and consistent expectations, the prices changes will influence farmers cotton planting acreage decision significantly, if the prices change frequently without a clear trend, small-scale decentralized farmers will not be able to form a stable and consistent expectation about the future relative price, it will be difficult for their decision to reflect prices change, under this conditions farmers decision may be the extension of itself in the past.Part IV is a brief conclusion of this paper and its policy implications. According to the empirical analysis and the corresponding conclusions, this paper's policy implications are: under the current conditions in our country, the cotton planting acreage is decided by the relative expected return, while the relative expected return depends on the relative expected relative prices and the relative expected yield. If the Government wants to control the supply of domestic cotton, on the one hand, they can invest in the technology by adjusting the distribution among different crops to influence the relative yields of different crops, and further to influence the returns farmers get from different crops and their planting choices. On the other hand, due to the influence of various factors, it is difficult for the small-scale decentralized farmers price expectation to match market demand. This divergence between expected price and the actual market price may lead to the inefficient allocation of resources and welfare loss. Cotton is of great important for farmer, textile industry and many other people, farmers' prices expectation not only directly affects the income of producers and consumers' welfare, but also affect the efficiency of the allocation of social resources and the speed and stability of economic development. Government should utilize their information advantages to the release guiding price as accurate as possible, make it become important factors influencing farmers the price expectation, reduce the errors may occur in farmers prices expectation and improve the efficiency of resource distribution and economic growth.