Research For Farmers' Income And Subsidy Policy In Major Grain-producing Areas In China

The most important problem for farmers especially for the farmers who grow grains in major grain-producing areas to live a well-off life is to increase their incomes. Based on further understanding on increasing of farmers'income across the nation, this paper mainly focused on the farmers in major grain-producing areas. The main research objectives in this study are to examine the situation of farmers'income in major grain-producing areas, to analyze the effect of subsidy on grain-producing farmers. This research constructed models of farmers'income & subsidy, growth target, effect of each income source on farmers'net income and factor analysis, and learned from the experience of the United States of America. The methodologies in this research are factor income theory, Gini coefficient analysis, path analysis, exponential smoothing and others. The purpose of this study is to find the way to help farmers in major grain-producing areas to increase their incomes.The main results of this study are:1. The two biggest sources of income of farmers are net income from household operations and wages income at present and in the near future. According to calculation, from 1993 to 2008, the biggest income of farmers across the nation was net income from household operations. It shared a higher proportion in major grain-producing areas (except Jiangsu province). According to prediction, wages income will become the highest income source in rural area by 2020 (including Hebei, Liaoning, Jiangsu, Hunan and Sichuan).2. Transfer income based on subsidy will share a higher proportion in farmers'income. According to forecasts, until 2020, 12.62% of the net income will be transfer income. Besides, the transfer income will account for more than 20% of farmers'net income in Inner Mongolia, Heilongjiang and Sichuan.3. It becomes a key source to narrow the income gap between farmers from the developed regions and the major grain-producing areas that transfer income which based on subsidy and net income from household operations increase stably. On the other hand, wages income also play an important role in increase of farmers'income and will become a breach to narrow the income gap in the near future.4. According to the results of the econometrics model, the usage of machine, fertilizer, the price of agricultural products, the area of arable land, yield of grain and the income from farming are positively correlated, the direct path coefficients are 0.836, 0.521, 0.233, 0.189 and 0.016, respectively. However, the indirect path coefficient of area of arable land is -1.112, which implied that arable land constraint farming income. Price of input, expenditure for household business and farming income are negatively correlated, the direct path coefficients are -0.002 and -0.392, respectively. It showed that reduce the cost may help to increase the income directly.5. Urbanization and wages income are positively correlated, the direct path coefficient is 0.781; the registered unemployment rate in Urban areas, the proportion of employed persons in primary industry and wages income are negatively correlated, the direct path coefficients are -0.111 and -0.331, respectively. It implied that improvement of urbanization and labor transfer from rural areas can help increase the farmers'income sustainably.6. The expected result is that the speed of increasing of farmers'income might slow down, and goal of well-off society might not be achieved. However, the expected goal of well-off society in rural areas might be achieved in most major grain-producing areas except Henan province.According to the results, some policy recommendations are given:First, to encourage the labor in rural areas transfer to other industries can help farmers to increase their net income, which can increase the wages income.Second, to use improved grain varieties can help farmers to raise the unit yield and save cost, so that farmers can increase their net income from household operations. And it is meaningful to ensure the food security.Third, to encourage the transfer of arable land management can help foster professional farmers who manage more arable lands, improve large scale of farms, and achieve economies of scale.Forth, to improve the level of farmers'organization and to encourage more deep processing industry can help to complete the whole industry.Fifth, to conduct a complete mechanism of grain price policy and agricultural subsidy system is meaningful, so that the subsidy on farmers can be increased.