China Agricultural Economic Review

Xiwen Chen

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927390

Purpose – Since the start of the twenty‐first century China has stepped into a new stage of harmonious urban‐rural development. Based on the brief review of policy changes since the new century, the purpose of this paper is to figure out the comprehensive policy framework, and analyze its background and reasons. Design/methodology/approach – First, this paper offers a brief review of China's rural reform with focus on the policy framework and changes since the reform of rural tax and fee system in 2000. Next, the paper focuses on food security to discuss grain price increase and China's grain imports, then the current problems facing China's agricultural and rural development are discussed and countermeasures provided. Findings – The paper finds that several policies have been implemented toward the coordination between urban and rural areas and toward the integration of urban and rural development. However, China's grain production is still facing big challenges, both from the increasing demand and the resource constraint. Therefore, food security should be given priority in future. China's current rural reform and development is also facing the problems such as slow growth of farmer's income, the impacts of migrant rural labourer on economy and society and the outflow of rural resources. Originality/value – This paper reviews systematically major policies of China's agriculture and rural development, and analyzes the characteristics of and reasons for China's grain price increase. Meanwhile, the constraint of resources, especially land and water, is also studied in detail. The paper's analysis can provide important advice for future policy making.

Xiaoyong Zhang; Lusine H. Aramyan

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927408

Purpose – Chinese agri‐food chains consist of the millions of small scale farmers, who are not well structured and organized in the supply chain. Owing to market liberalization and globalization, one of the most challenging issues along agri‐food chains in China is becoming the issue of how to link these small‐scale farmers into the modern chains. Consequently, it is essential for both policy makers and private sectors to understand the governance structure in agri‐food supply chains. Therefore, the purpose of this paper is to develop a theoretical framework for supply chain governance, including its antecedents and consequences, as well as a series of hypotheses for empirical testing. Design/methodology/approach – A conceptual framework of chain governance is proposed in this study, where governance structure consists of two dimensions: contractual governance and relational governance. The study intends to propose a complementary relationship between contracts and relational aspects, such as trust, in the Chinese context. Future research is needed to empirically test this model. Findings – The proposed conceptual model is unique, since the majority of the articles addressing this topic focuses on contract farming while limited research touches upon the issues of trust and relations. However, a combination of both contracting and relationships are seldom addressed. Originality/value – This paper evaluates a novel concept of two dimensional governance structure in the agri‐food supply chain, where transaction cost economics theory and relational theory are combined to study the governance relationships between small scale producers in China and their buyers.

Calum G. Turvey; Rong Kong

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927417

Purpose – The purpose of this paper is to investigate the relationships between business risks and credit choices of 400 farm households surveyed in Shaanxi province in October 2007 in the Yangling district. More specifically, this paper investigates whether or not rural farm households in China balance business risks from agricultural production with financial risk from the use of debt. Design/methodology/approach – The data were collected through a survey of 400 farm households in Shaanxi province conducted in October 2007. Four separate regressions are run using a credit measure as the dependent variable and measures of profitability, risk, risk aversion, and demography, and debt source (formal versus informal lending) as independent variables. Findings – The model shows evidence of risk balancing. That is, there is strong evidence that Chinese farmers reduce credit use and financial risk, as business risks increase. Practical implications – The results suggest that Chinese policy makers could encourage the use of finacial leverage and prudent debt use by offering risk reducing programs such as crop insurance, weather insurance, or price insurance. Originality/value – This paper uses a unique survey form to collect production risk data as well as gather information on credit use and sources. Data were collected so that risk measures could easily be computed using a triangular distribution. Furthermore, this is believed to be the first empirical validation of the risk balancing hypothesis.

Abiodun Elijah Obayelu; V.O. Okoruwa; O.I.Y. Ajani

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927426

Purpose – The purpose of this paper is to examine the impact of socio‐economic variables on households' food demand. This paper derived the indirect utility function in terms of expenditure and price through the use of nonlinear demand quadratic almost ideal demand system (QUAIDS) model to estimate price, expenditure and elasticities of food items consumed in the North‐Central, Nigeria, and the impact of the socio‐economic variables on households' food demand. Design/methodology/approach – The primary data used came from random selection of 396 households between 2006 and 2007 through a stratified random sampling procedure from Kwara and Kogi states making up the North Central zone in Nigeria. Findings – All own price elasticities of the six food groups analyzed (root and tubers – RT, cereal – CR, legume – LG, animal protein – AP, fruits and vegetable – FV, fats and oil) showed that they are price inelastic. The results of income elasticity show that AP consumption is the most sensitive to income changes, while fats and oil is the least sensitive to income changes. Factors that positively and significantly affected demand for LG, FV, AP, CR and RT were household size (HSZ), level of education, primary occupation, access to credit, presence of children ≤6 years mainly at P <0.01. HSZ ( P <0.01) negatively affected demand for AP. Originality/value – This paper is original and novel in that it examines the impact of socio‐economic variables on households' food demand. High‐income elasticities of demand for all the food groups in QUAIDS except fruits and vegetable, as well as fats and oils, suggests that income‐generating policies will foster higher levels of consumption for these commodities.

Huixia Liu; Linxiu Zhang; Gale Summerfield; Yaojiang Shi

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927435

Purpose – The social safety net of health care insurance is rapidly expanding in rural China. New Rural Cooperative Medical System (NRCMS) programs proliferated between the national decree of 2002 and 2008, moving from a situation where less than 10 per cent of the rural population had access to health insurance to one where over 80 per cent had the opportunity to participate in these programs. The purpose of this paper is to investigate how NRCMS affects equity goals in access to health care and explore the gender‐specific determinants for farmers to participate in NRCMS and use health care services. Design/methodology/approach – Empirical analysis, by using the national rural socio‐economic survey data collected by the Centre for Chinese Agricultural Policy, Chinese Academy of Sciences in 2005. Based on Andersen's access to medical care model, the probit model for regression was used. All analyses are conducted with Stata 9.0 software. Findings – Gender was found to have significant effects on both NRCMS participation and health care use. Age, education, deductible level and ceiling limits of reimbursement had positive effects on both NRCMS participation and health care use. The narrow coverage with high co‐payment compensation system asserted significant deterrence effects on equity access to health care. This is only a first step toward building an adequate health safety net for all rural residents, there is still a long way to go. Originality/value – Using the national household survey data, this study is one of few studies focusing on the interplay between gender and the distinct determinants of access to health care under the ongoing NRCMS. The relevant findings have important implications for further policy design.

Pei Guo; Xiangping Jia

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927444

Purpose – Historically, China's political attempts to provide access to rural credit has met with mixed results and an institutional structure that often strays from intended policy goals. Unlike Robin Hood of English lore, the emergence of financial institutions in China appears to have robbed from the poor to lend to the rich, with actions that severely depleted the lending resources required for rural development. Historically, there has been a close correspondence between financial depression and the many policy‐driven financial institutions that dominated the rural financial system in China. More recently, ongoing reforms are dedicated towards a gradual liberalization within the system. Therefore, the purpose of this paper is to rethink the structure of rural finance in China, reviewing the current reform and putting forward the policy implications. Design/methodology/approach – The paper explores the context of agricultural transition and political process as defined by the various interlinkages across the Chinese rural financial system. Findings – The paper finds that there has been negligible progress in the evolution of the rural financial market in China. The policy‐led financial institutions ended up as merely a disbursement window and a costly drain on state budget. Institutional changes were locked in by patching up the existing institutions. The ongoing reforms projected by policymakers promote competition among different institutional lenders and thus potentially improve the financial services in rural areas. Originality/value – This paper analyzes the new‐round reform of rural finance in China and brings forward the future direction of rural finance in China.

Liu Heguang; Minoru Tada; Sun Dongsheng

2009 China Agricultural Economic Review

doi: 10.1108/17561370910927453

Purpose – Economies in East Asia are at different development stages. Economic development has an impact on factor endowments and the intensities, then on the mode of agricultural trade. To examine the trade modes of these seven East Asian countries' agricultural products will give us some hints to understand the question how economic development impacts the changing patterns in comparative advantage (CA) of agricultural products. Therefore, this paper aims to test the question by using a four‐quadrant method. Design/methodology/approach – Trade specialization coefficient is used to analyze the agricultural CA among aggregated agricultural products and two typical kinds of products: labor‐ and land‐intensive agricultural products. Then a four‐quadrant method is applied in this study, where trade specialization of agricultural products consists of 2D: labor‐intensive and land‐intensive. The study intends to test the changing routes of CA of agricultural products under the background of economic development and changing situation of factor endowments. Findings – The analysis result supports that economic development has impact on the trade mode of agricultural products. Originality/value – The four‐quadrant method is firstly applied to analyze the changing pattern of agricultural products in East Asian countries. This study shows that the changing routes of CA of agricultural products will not limit to only one mode as found by current studies.