The impact of Chinese rice support policies on rice acreages

Abstract

Declining arable land and yield stagnation pose serious challenges to food security in China. Since 2004, the Chinese government has introduced rice support policies to stimulate rice production. A bundle of incentives, including a minimum procurement price, were introduced. Whether they were effective? Rice acreages have increased since the start of this policy, which could also result from rising rice price levels both nationally and globally. Using a natural experiment created by the minimum procurement price policy being introduced in a selected set of Chinese regions, we use a dynamic fixed effects model to perform a difference-in-differences analysis on the effectiveness of these rice support policies. We find that indica rice acreages do respond to changes in the rice prices, and, controlling for rice prices, that China’s rice support policies were effective in increasing rice acreages of both early and late indica after 2004. The paper concludes with policy implications.