Grain market liberalization and deregulation in China : the mediating role of markets for farm households in Jiangxi Province

This thesis analyzes the effects of market liberalization and deregulation in the grain marketing channel on farm households in three villages in a less favored area inChina, taking into account the effects of market access. Market access is defined as the distance between the village that farm households reside in and the closest consumer markets. It is measured by the costs that private traders make to transport rice from the village to their buyers. The marketing channel models used in this study are extensions of simple models of competition, i.e. monopsony, Cournot, quantity leadership, price leadership, and perfect competition. To account for other factors than rice market liberalization and deregulation affecting village rice exports a nonseparable household CGE (Computable General Equilibrium) model is developed. The model accounts for non-separability of household decision making and for imperfect competition in the village rice export market (rice purchase market). Data used in this study are collected through personal interviews conducted in the study areas by the SERENA ( S trengthening E nvironmental and R esource E conomics atN anjingA griculturalUniversity) and RESPONSE ( Re gional Food S ecurity Po licies for N atural Resource Management and S ustainable E conomies) projects. This thesis shows thatChina's government has gradually liberalized and deregulated its grain market and relieved the fiscal budget from subsidizing the SGTCs (State Grain Trading Companies). Competition between the private traders and the SGTCs has become more intensive in the rice purchase market in 2000-03. State grain policies favored the SGTCs, which created an unfair competition environment for private traders. The pressure for further reforms to create a fair competition environment remains. Rice producers benefit from market liberalization and deregulation. How much they benefit depends on the degree of market imperfections before market liberalization and deregulation and the degree of market access. It is found the degree of competition in the rice purchase market is already intense in 2000. The effects of market liberalization and deregulation on farm households are less when taking into account the production of other farm products and off-farm employment.