Regulate the strategic management policies of the government, for the optimal use of land and reduce the cost of agricultural land in the production of agricultural products

This study investigates the factors affecting farmland rental prices in China. Special emphasis is put on the Q15 capitalization of China’s grain subsidy program into land rental rates. Using national representative farmgrain subsidy payments for contracted farmland increases the farmland rental price by about 1%. However, quantile regression results show that the capitalization rat thatfor farmfamilysize,laborrentalinputexperience,and farmandlocationnatural aredisasterimportantwe detectfactorsa negativedrivingimpactup farmlandon land rental rental. This study highlights several contributions to current research in the related field. First, to our knowledge, this is thefirst study focusing on the capitalization of grain subsidies into farmland rental prices in rural China. This analysis is necessary because in recent years, Chinese farmers have experienced quickly developing land rental markets, and land rental costs’ share of total production costs has gradually increased. Second, this study extends the currentunderstanding of farmland rental prices under rural China’s peculiar land tenure system, in which village collectives own rural land and farmers have only constrained land use rights.1 Third, due to Chinese government’s intervention in the farmland rental market, findings from this study could help the government in adjusting relevant land-use policies, reducing farmland costs in crop production, and making farming attractive to new entrants in agricultural production. Finally, unlike previous studies that assumed a homogeneous relationship across the entire distribution of farmland rental prices, we focus on potentially more complex and heterogeneous relationships between government grain subsidies and farmland rental prices.