http://www.reuters.

com/article/us-china-corn-foodprocessing-idUSKCN0WY42S

Comparative analysis
Variations in investment of agricultural price support
between the EU and China

Carlos Sebastian Ayala Promotor: Prof. dr. ir. Jeroen Buysse

Tutor: Jan Brusselaers
a. Problem Statement and Relevance

Agricultural GDP and Total Support Estimates (mid-1990s to 2012-2014) :

Europe: 13%The relevance
and by of this
more than 20%, study:
respectively.
China: 20% and TSE by more than 30% in recent years (OECD, 2015)
Contribution: specific and current information on PSP in
Physical similarities: small share of arable land.
China
Price support policies:
a) Europe: moving
Comparison: with towards + sustainable
the European and allocative efficient policies
experience.
China: ensure self-sufficiency and basic supply of major agricultural
products

b) Europe : Elimination
Awareness: OECDs of all kind
tools forofpolicy
domestic price support
analysis policy for
within
grains
China: 2016,academic research
Elimination of domestic price support policy in corn

1
b) Specific Objectives

1. Differentiate between agricultural systems & price support

policies
General
2. Variations of price support policy (PSP) investment in China by
OECD PSE and related indicators Market Price Support
To assess the effect of variations of price support policy in
Chinas
3. Root macro-indicators
causes through
& impacts of variations of PSPthe
forMarket
corn in 5Price
macro-
Indicator and
indicators in to
China compare it withModel
Error Correction the EUs experience
4. Future trends and contrasting policy alternatives
c. Research Questions

To what did extent price support policy variations have an

effect on corn prices, production, import and export
levels in China during the period 2001 2013?

What are the differences in policy application between

the EU and China?
d. Methodology (i)

Qualitative
Semi-structured
(survey interviews
research)

FAOSTAT, USDA
Chinese Statistical
Yearbook
Quantitative

(indicators) MPSi calculations

based on OECDs PSE
d. Methodology (ii)

Semi-structured Officials, Academicians

interviews CAU, CAS EUDEL

Categories & label

Market Price Differential
Market Price Support Market Price Support
indicator

Correlated & Stationary

Error Correction Model Price & Production
(combination)
e. Results (i)
a. China: same issues as the EU
(80s) due to same policy
implementation

b. EU: social and economic systems

Differentiation efficiency & market-oriented.
agricultural systems & China: agricultural system
price support policies social and political changes

c. China and the EU strength

cooperation

New technologies on food

More comprehensive cooperation for
technical assistance
e. Results (ii)

a. China investment support 2,000

policies for corn (last 5 years) 1,800

Thousand MPS
1,600

Variations of price b. Financial effects in the 1,400

support policy in national budget

1,200

China / OECD PSE

1,000

800

c. Corns overproduction 600

Market Price Support Indicator

accomplished national
400

200

capacity for stockpiling -

e. Results (iii)
a. 5 macro-indicators; no significance on
their correlation

b. Price, import, production and MPS:

Impacts of variations
of PSP in 5 major
macro-indicators in
China
Error Correction Model (EMC)
co-integrated & significant
correlated in the long term (stationary)
c. Model is correcting disequilibrium
from previous period at a high annual
rate

d. MPS has a stronger effect on

corns price than in production
e. Results (iv)
a. 2013 -Inner Mongolia, Jilin,
Liaoning & Heilogjiang soybeans
Province of Xinjiang - cotton

b. Government covers price gap payment

Policy measures as
alternative for price
support in China
c.
Target price pilot policy
according the acreage of planted land &
quantity of production sold to the market
Costly endeavor from the government
to apply an alternative for price
support

d. Agricultural insurance policy

price is regulated by the insurance
market, not by the government
f. Conclusions
1. China is still developing their capabilities for policy design and
implementation. + market-oriented approach

2. Economically stimulate rural areas through more efficient

agriculture. Change in social dynamics of agricultural production

3. Policy system in China: agricultural sector by bio-technology &

stabilize domestic corns market. Government investment price
support, but not for staple commodities (self-sufficiency)

4. Corn is mainly used as industrial input, just small portion for per
capita consumption. Change in corn uses led to elimination of
price support policy.

5. EU-China Comprehensive Strategic Partnership: effective to boost

bilateral cooperation. Cultural issues complex problem for
consolidation of comprehensive partnership.
Thank you!!
Danku!!
!!