The 2019 Annual Meeting of the Canadian Agricultural Economics Society (CAES) was held in Ottawa, Canada from July 9 to 12. Dr. Jiarong Qian, an associate professor at the Institute of Agricultural Economics and Development CAAS, attended the meeting and made a presentation entitled “Grain price support policy and production costs in China: A Panel Bounds Testing Approach.”

　　Dr. Qian pointed out grain production costs had increased rapidly since 2004. In 2014, rice production costs rose by 169.5 percent over 2003, and 106.4 percent over 2007. The real increases were 94.9 percent and 67.9 percent, respectively. Based on theoretical and empirical research, Dr. Qian concluded that the present price support policy may be the deep cause behind rapidly increasing production costs. Price support policy may show significantly positive impacts on grain production by inducing farmers to raise per capital input usage, triggering input factor prices to increase.

　　Dr. Qian emphasized that the Chinese government sets the price support level according to increases in production costs. This creates a vicious cycle of rising price support and production costs, gradually leading to the current situation of both high price support level and high production costs in China. This research contributes to understanding the rapid rises in agricultural costs and to the reforms of the present grain price support policy in China.

　　Finally, Dr. Qian suggested that future price policy reforms should fully take production costs into account, and try to avoid showing influence on farmers’ behaviors on input usage. He added that measures to control input factor prices should complement the present price support policy. Most importantly, grain support prices should not be set up in response to changes in production costs, to help break the vicious cycle of rising price support level and production costs.