Patterns of Domestic Grain Flows and Regional Comparative Advantage in Grain Production in China

Abstract

Regional grain flows in China have been expanding with the growth of grain production and the development of grain markets. However, is the current pattern of regional grain flows consistent with regional comparative advantage in grain production in China? This paper examines this question by using a binomial logit model with a discrete dependent variable of provincial net grain flows, and the independent variables of regional comparative advantage indicators and other factors affecting the supply and demand in grain markets. The study reveals that the current pattern of China's regional grain flows is consistent with the regional comparative advantage in grain production, measured by the comparative advantage indicators of Domestic Resource Costs Coefficient (DRCC) and Net Social Profitability (NSP). However, the Efficiency Advantage Indices (EAI), measured by relative grain yield, and the Scale Advantage Indices (SAI), measured by relative grain sown area, are not statistically significant determinants of the observed pattern of regional grain flows in China. This implies that government intervention in grain production is still an obstacle for the Chinese farmers to optimise their grain production mix.