Target price policy and rural household income: Evidence from China

Agricultural subsidy policy can improve the planting enthusiasm of rural households by increasing their income. It is of great significance to assess and summarise the effect of the soybean and cotton target price subsidy policy and to determine future policy direction. Using the national rural fixed-observation point socioeconomic survey data from 2009 to 2017, the study employed the difference-in-differences (DID) method to evaluate the impact of the target price policy (TPP) on rural household income in China. TPP had no significant impact on the total income of rural households. Specifically, TPP increased the farm income of rural households but simultaneously reduced the wage income and had no significant impact on the other income. Moreover, the impact of TPP on rural household income varied with the planting scale and income level; the effect of TPP was strong among the non-poor or scale operation rural households. TPP implementation affected rural household farm and wage income by affecting farmers' allocation of working time and cost input. Therefore, implementing TPP should consider farmers' participation in non-farm employment, further adjust the subsidy intensity and scope, and combine direct subsidies with the poverty reduction effect in poor areas. The contribution of this article is to explore the implementation effect of target price subsidy policies from the perspective of farmers' income, to deconstruct farmers' income, and explore the mechanism of policy action. This paper provides a theoretical basis and policy inspiration for China to improve and adjust the agricultural subsidy policy, mobilise farmers' enthusiasm to cultivate, and ensure national food security.