The subsidization of farming households in China's agriculture

Concerned about national food self-sufficiency and rural household incomes, in 2004 China decided to reverse its longstanding policy of taxing farm households and instead began to provide them with subsidies. Since 2004, annual announcements have trumpeted rises in subsidies. Despite the historic turnaround of policy and likely implication of this subsidy policy to China's food economy, there has been little household level survey-based research that has sought to understand the nature of China's subsidy programs from the viewpoint of the farmer. Using data from two sets of household-based surveys (covering tens of thousands of households and most major producing provinces) and survey data from government, in this paper we examine the subsidies that are directly given to farmers, one of the newest and relatively high profiles components of China's subsidy programs. We focus on China's grain, input, seed, and machinery subsidy programs. According to the survey-based findings, we show that although agricultural subsidies per farm are low, on a per hectare basis the rate of subsidies is high. Almost all producers are receiving them. Subsidies are mostly being given to the land contractor, not the tiller. Most of grain, input and seed subsidies are non-distorting, but machinery subsidy is based on farmers' actual purchase of machineries.