Research On The Problems And Countermeasures Of Fund Allocation Of Finance Support To Agriculture In The Western Region Of China

The Ministry of Finance issued the "Decision on further integration of agriculture guidance fund" in May 2006, the state gradually increase investment in agriculture and began to pay attention to efficiency of capital allocation about the financial support agriculture at the same time. while at the background of the Western Development ,the reality of optimization on funding allocation of finance supporting agriculture is more urgent in the n the western region than the other region..This paper is about the fund allocation issue of finance supporting agriculture in the western area. First of all with the help of public expenditure theory, it has sorted the fund allocation of finance supporting agriculture. With the help of financial transfer payment theory , it has proved the fund allocation necessity of finance supporting agriculture, discomposed the economic efficiency and sorted the different opinions of economic efficiency. Then with the help of game theory, it has described the gambling process of fund allocation in the western area. Later, according the economic condition of the western area and the background of building a new socialist countryside, it has estimated the fund allocation of finance supporting agriculture. Last but not least, it has discussed the problems about fund allocation of finance supporting agriculture, constructed the reasons of these problems and gotten the suggestion optimized funding allocation of finance supporting agriculture in the western area. The basic results of this paper are as follow.1.the involvement of finance supporting agriculture is essential to develop sustainable agriculture in the western area.The social price of agricultural product is decided by the condition of inferior land. Therefore, the land rent is needed to balance "the false social value" between agricultural product and industrial product. The microscopic land rent transforms the finance in the macro-scope to support agriculture. The demand elasticity of agricultural product is low and the supply elasticity of agricultural product is high. The market of agricultural product is a typical "cobweb model of radiation market". The finance should be involved to balance the demand and supply of agricultural product. The investment of agriculture is restricted by nature condition. . It takes a long time. It affords high risk. In the market condition, the investment of agriculture should get allowance by the government. Agriculture is the basic of the economy, has the characteristic of public product and should be protected by public finance. Optimization of fund allocation can solve the problem between fund limited of government and the fund limitedness of agricultural demand. This is discussed in the paper about financial transfer payment theory.2. The construction in the western area about fund allocation of finance supporting agriculture is the result struggled by several powers.The choices of farmers are hard to show in a way. In the short run, this won't restrict the choices of the government. But in the long run, the influence of the farmer's choices is profound to the fund allocation of the government. Under the condition of the market, the government and the farmers have multiple options to allocate the agricultural fund. Under the limited rational supposition, the government and the farmers will realize short-term benefit maximization Nash, but non -long -term benefit maximization's Pereto which is superior. The fund allocation between the government and the agricultural enterprise is one kind of sequential gambling pattern. The government has the superiority of first move. The tax rate is an important variable to affect the bilateral decision-making. The balance of fund allocation realized by the tax rate is hard to continue. So the government should allocate agricultural resource effectively in the macro-scope. The agricultural enterprises need to raise the efficiency of the production. The fund allocation gambling of finance support agriculture between the western and central government is effected by cost to tax and the quantity of financial transfer payment. Under the different contrast conditions of the variable, they have different behaviors.3. The fund allocation problem of finance supporting agriculture can be showed in scale, framework and efficiency in the western area.The financial investment to agriculture is fluctuated in the low level in the western area. The investment can not realize the request of "Agriculture Law" and depend to the central supporting too much. The output of agriculture in the western area fluctuates correspondingly. The financial expenditure framework is expending unreasonably, especially showing among the projects and the areas. The results are that the income growth of farmer is slowing and the labor of the agriculture is draining seriously. The efficiency of fund allocation slides. This is showed by "screen" and "empty throw" phenomenon. The results are that the agricultural fund flows out and the fund demand gap of agriculture is expanding.4. This condition is caused by geography,history,system and economy in the western area. The ecological environment is frail in the western area. The agriculture undertakes the dural-responsibility of protecting environment and raising residents. The call for fund is huge. Since the Opening and Reform and the development strategy of the central government, the western area makes significant sacrifice. While the compensation for the western area need a long process. The local government may restrict the investment of agriculture if they are effected by benefit guidance mechanism. The reform of tax worsens the revenue condition of the western government and the ability to supporting agriculture. The backward working condition of agriculture needs huge fund butthe finance can not provide essential fund.5. We should construct a capital allocation optimizing mechanism in both directionsto promote the leveraged function of funds allocation of finance supporting agriculture, and achieve sustainable development of economic co-ordination in the western region, in the current circumstances, we should construct a capital allocation optimizing mechanism in both directions. That is, top-down planning mechanism and bottom-up driving mechanisms. Specific measures include: (1) employ the central government's preferential policies for western agriculture actively; (2) improve financial management systems of financial support for agriculture; (3) play the financial leverage of allocation of funds for agriculture; (4) enhance the organizations farmer ; (5) broaden the financing channels for agricultural enterprises; (6) to raise efficiency funds allocation by competition.