The Effect of the Major-Grain-Producing-Areas Oriented Policy on Crop Production: Evidence from China

Abstract

As a powerful actor in the global food system, China experienced a significant drop in crop production from 1998 to 2003, which posed a substantial threat to national food security and led to the establishment of 13 major grain-producing areas (MGPA). Although some qualitative research has found that the MGPA policy plays an important role in ensuring the national food security, quantitative evidence on the effect of the MGPA policy and its potential mechanism remains scarce. Based on China’s interprovincial panel data from 1998 to 2018, this study used a difference-in-differences (DD) estimation strategy to analyze the treatment effect of the MGPA policy by taking the assignment of 13 MGPA as a quasi-experiment. The results showed that the enforcement of the MGPA policy significantly increased crop production, especially in terms of grain, rice and wheat yields. The average grain yields were raised by 27.5%. The results of the event study analysis showed that the treatment effects were sustainable in the following years of the policy implementation. This study also explored alternative causal channels and found that the MGPA policy raised crop yields mainly by expanding planting areas, improving the level of mechanization and increasing transfer payments. These findings demonstrate the effectiveness of the MGPA policy in increasing crop production in a developing country setting, which could enlighten policymakers in some less well-developed countries on boosting crop production and maintaining food security.