Abstract
China’s minimum grain procurement price program aims to boost grain production and ensure food self-sufficiency. It may also affect the already very high levels of chemical fertilizer and pesticides consumption, but little is known about these potential side-effects. In this paper, we apply panel data regression techniques to a large rural household-level data set for the period 1997–2010 to examine whether and how the minimum grain procurement price program affected households’ agrochemical use. We find that the minimum grain procurement price program negatively affected both chemical fertilizer and pesticides use, with pesticides use being more responsive than the use of fertilizer. The higher wheat and rice prices that resulted from the program stimulated the use of agrochemicals, but they also stimulated area expansion which contributed to lower agrochemical use per unit of land. These counteracting indirect effects were overshadowed by the large negative direct effect of the minimum procurement price of rice on the use of fertilizer and pesticides.
Highlights
Minimum support price policy has been widely used in developing countries, such as Bangladesh, Brazil, Chile, Ethiopia, India, Indonesia, Kenya, Malawi, Nigeria, Pakistan, Thailand, Turkey, and Zambia [1,2]
As grain production fell to a historical low of 431 million tons in 2003 and the government grain stock decreased to its lowest level in 2004 [4], China replaced its centuries-old policy of taxing agriculture by subsidizing and providing price support to grain producers [4,5,6]
To examine whether and how China’s minimum grain procurement price affects households’ agrochemical use, we carried out an empirical study taking the following steps
Summary
Minimum support price policy has been widely used in developing countries, such as Bangladesh, Brazil, Chile, Ethiopia, India, Indonesia, Kenya, Malawi, Nigeria, Pakistan, Thailand, Turkey, and Zambia [1,2]. Only a limited number of studies, such as Li et al [7], Qian et al [12], Ali et al [20], Aditya et al [21], Krishnaswamy [22], Chintapalli and Tang [23], and Ritu et al [24], provided empirical evidence of this Most of these studies focus on minimum support price influencing land area in India. They do not consider the influence on other inputs, agrochemical use, which may pollute the environment [25,26]. Using a village computable general equilibrium model in which land is a non-tradable, Heerink et al [5] estimated that the 36.6%
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