Household own–consumption and grain marketable surplus in China

This paper explores the interrelationships between Chinese grain prices, farm households' income, their own–consumption of grain and their marketable surplus supply during the rural reform era. A Gorman polar indirect utility function is employed, from which a set of household grain supply and consumption functions are estimated. The integrated modelling approach recognizes the interdependence of household supply and consumption decisions. A set of compensated elasticities are derived to show the effects of grain prices, farm income and full household income on grain consumption and on–farm labour supply. The impact of own–consumption on marketable surplus supply is then gauged by estimating conditional and unconditional price elasticities of marketable surplus supply. The results point to the relatively strong positive effect of off–farm income on household's own–consumption of grain and the negative influence this has had on the marketable surplus of grain in China during the reform era.