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Pricing Mechanism Reform of Major Agricultural Products: Achievements, Problems and Policy Options (No.120, 2018)


By Cheng Yu & Jin Sanlin, Research Department of Rural Economy, DRC

Research Report, No.120, 2018 (Total 5395) 2018-8-2

Abstract: Since 2014, with the idea of “taking measures according to the variety of agricultural products and carrying forward these measures progressively” as well as the implementation of the principle of “pricing by market and the separation of pricing from subsidies”, some achievements have been made in China in promoting the reform of pricing mechanism and purchasing and storage mechanism for major agricultural products. However, in the new model of support policies, some problems still exist. For example, limited subsidies for some varieties and imbalanced supports among different varieties cause human intervention in the production selection, and inadequate connection with the market weakens the policy control ability. In this regard, this paper proposes some policy options to improve the support policies for major agricultural products. The “Green Box” policies such as the ecological subsidies for fertile fields should be adopted to “maintain soil fertility and enhance the improvement of productivity”, comprehensive income insurance should be promoted to “secure profits and ensure yields”, and special subsidies should be offered to “guarantee competitive and distinctive agricultural products with improved quality. In addition, we should “hold the bottom line” by lowering the minimum purchasing price of wheat and rice to the ceiling price in the international market and “protect the domestic market” by intensifying the market-regulated storage system.

Key word: subsidies for agricultural products, pricing mechanism, separation of pricing from subsidies