How the Soybean Producer Subsidy Policy affects crop planting structure: evidence from Chinese county-level data

Purpose The Soybean Producer Subsidy Policy (SPSP), an agricultural support policy enacted in China within the past few years, is designed to optimise crop planting structure. This study analyses the impact of SPSP on the crop planting structure in terms of absolute and comparative incomes and elucidates the mechanisms involved. Design/methodology/approach Utilising balanced county-level panel data from 966 counties in China’s major soybean-producing regions, spanning from 2008 to 2021, we investigate the impacts of SPSP on crop planting structure by applying a difference-in-difference (DID) model. Findings The findings reveal several crucial insights. First, SPSP optimises the crop planting structure in Northeast China, primarily through an expansion in the area sown to soybeans and a simultaneous reduction in the area sown to maize. Second, the impacts of SPSP gradually strengthen over time but begin to weaken by 2021. Third, heterogeneity analysis indicates that the effects of SPSP are most pronounced in Eastern Inner Mongolia, followed by Heilongjiang, Jilin, and Liaoning. Finally, SPSP incentivises farmers to expand soybean sown areas by improving absolute rather than comparative incomes from soybean cultivation. Practical implications Addressing structural contradictions within China’s food supply chain necessitates the adjustment of support policies for different crops to mitigate market distortions. Establishing a holistic agricultural support system encompassing various crops could promote sustainable agricultural practices in the future. Originality/value Our findings are valuable for policy makers in China and globally who aim to establish support systems for regional linkages that include a variety of crops.