Quality or quantity? Exploring mechanisms linking producer subsidy to soybean production by DID models

The implementation of the producer subsidy marks a pivotal shift in China’s grain price regulation, transitioning from direct interventions to more market-based policies. However, the specific effects of such policies on food supply remain obscure. This study leverages panel data from eight soybean-producing provinces in China during 2012–2022, and employs difference-in-differences (DID) models, to assess the dual impacts of the subsidy on both the quantity and quality of soybean production. The findings indicate that while the policy significantly boosted soybean yield per capita and per unit area, its effect on improving soybean quality was limited. Moreover, the policy led to a notable decline in the number of grain farmers, reducing labor supply in agriculture, while simultaneously encouraging higher levels of mechanization, as farmers increased investments in non-labor inputs for soybean cultivation. The implications of findings are essential for developing a sustainable grain industry that ensures both the quantity and quality of national food security.