2002•Nanjing Nongye Daxue xuebaoRequires access
Grain price protection and its pricing mechanism in China
Sun Hang
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Abstract
Grain price protection changes and its pricing mechanism in China are addressed. The protection price policy has been adopted in China since 1990. Early 1990s witnessed the initial grain protection price higher than the market price and the former's gradual returning to level with the purchasing price. The protection price mechanism is analyzed in the light of economic models. The protection price is set in line with the principle that the price should cover the production cost and provide some earnings for peasants. The price setting system has been established in China: the purchasing price is determined by the demand and supply while the protection price, by the production cost. The purchasing price is based on the market price when the latter is higher than the protection price and it is set to be not lower than the protection price when the market price is lower than the market price.