Effect of grain price support policy in China: A grey relational analysis

Since 2004 the minimum purchasing price policy has been implemented in China and the policy effect attracts extensive attention. This paper introduces this current grain price support policy and assesses the effect of this policy on regulating China domestic grain prices employing the grey relational analysis. The results suggest that price support policy plays a most important role in determining grain market prices relative to other factors including production cost, international price and production, implying that the policy impacts the grain market prices effectively and the expected goals of this policy have been achieved. Therefore, in controlling grain market prices, employing grain minimum purchasing price policy is efficient, and continuing efforts should be made to design appropriate minimum purchasing prices for grains.