1. Introduction
Food security is an essential guarantee for world peace and development, and a key factor in building a community of human destiny. When grain production technology reaches its peak, the shortage of cultivated land will become the primary limiting factor for grain production [
1]. In the limited cultivated land, the choice of planting structure is an important factor affecting food security. The adjustment direction of planting structure faced by rational farmers includes ‘non-grain’ and ‘grain-oriented’. ‘Non-grain’ production in China refers to the cultivation of vegetable, cotton, or other multigrain and cash crops. By contrast, ‘grain-oriented’ production means planting wheat, rice, and corn. ‘Grain-oriented’ production is vital to ensure food security. However, as shown in
Figure 1, there has been a recent trend towards ‘non-grain’ production in China. The non-grain production of fruits and vegetables will cause the ecological risk of heavy metal pollution [
2], and the production of mushrooms will bring the destruction of the quality of the cultivated land [
3], which will ultimately have serious negative impacts on ensuring food security. The government has long been concerned about the negative impact of non-grain use of cultivated land. In 2020, The General Office of the State Council issued the
Opinions on Preventing the Non-Grain Use of Cultivated Land and Stabilizing Grain Production, which clearly stated that strong measures will be taken to prevent the non-grain use of cultivated land and effectively stabilize grain production.
Policy-based agricultural insurance, with financial support, plays the role of economic compensation and redistribution [
4], and agricultural insurance policies are adjusting continuously to the conditions of agricultural production. This study presents the pilot of full-cost agricultural insurance and planting income insurance as agricultural insurance policy adjustments. Full-cost agricultural insurance covers all costs involved in agricultural production, including material and service costs, labor costs, and land costs, and is more in line with the actual production cost for farmers. Then, unlike pure yield and price insurance, planting income insurance covers both natural and market risks. Some scholars have suggested that full-cost agricultural insurance and planting income insurance can meet the needs of large-scale grain growers, promote mechanized input, and promote an increase in the grain planting area and a shift towards a ‘grain-oriented’ planting structure [
5,
6,
7].
The 2024 No. 1 Central Document, the first policy document for agriculture issued by the Chinese Central government in 2024, highlights the need to stabilize the grain planting area, expand the implementation of full-cost agricultural insurance and planting income insurance policies, achieve nationwide coverage of the three main grains, and ultimately contribute to ensuring food security. At the same time, it can be seen from
the 2024 No. 1 Central Document that agricultural insurance policy adjustments only cover the three major grain crops (rice, wheat, and corn), but not non-grain crops.
Firstly, this study considers the grain planting area and planting structure as explanatory variables and aims to expand the research on the mechanisms of agricultural insurance policy adjustments to ensure food security. While food production has increased in recent years, this is largely due to advancements in production technology that have increased the yield per unit area. However, it is important to note that this increase in production may be masking the decline in the quality of cultivated land due to non-grain production [
8]. Secondly, this study analyzes the effects of full-cost agricultural insurance and plantation income insurance from a macro perspective. Most relevant studies at present focus on a small range of objects, and a lack of research on whether these localised features and problems of full-cost agricultural insurance and planting income insurance affecting food production also have a macro-level impact [
9]. Thirdly, this study analyzed the impact of full-cost agricultural insurance and planting income insurance on the heterogeneity of grain area and plantation structure measured by risk level zones to fill in the gaps in existing research.
3. Theoretical Hypothesis
Agricultural insurance can influence farmers’ production and management decisions by providing risk guarantees. However, traditional yield and single-cost insurance for natural risks and price insurance for market risks may not be suitable for the changing agricultural production and market environment. This is mainly due to incomplete cost coverage and the insurance liability gap between price and output when guaranteeing farmers’ expected income. Therefore, from the perspective of product design and policy subsidies, to enhance the protection of farmers’ expected income and promote grain production, it is recommended to use full-cost insurance that covers all the costs from grain production, as well as planting income insurance that covers both the natural and market risks. Based on the existing literature, this study presents a theoretical analysis framework for the impact of full-cost agricultural insurance and planting income insurance on grain planting area and planting structure. The framework is divided into four dimensions based on differences in influencing mechanisms: stable income expectations, increase in the application of agricultural machinery, ‘implicit endorsement’ coexisting with ‘rational economic man’, and driven by external factors. The effects of full-cost agricultural insurance and planting income insurance on the grain planting area and planting structure were discussed.
Stable income expectations. Although self-reliance remains a characteristic of China’s smallholder peasant economy, it has never been the sole feature of agricultural production. One of the most important attributes is the market exchange of agricultural products. Agricultural products are sold in the market after the cycle of production, except for some that are used for self-consumption. The sale of agricultural products is the main source of income for farmers, and the income of farmers not only meets the needs of life, but also determines the capital input of agricultural production. The sales of agricultural products are mainly determined by factors such as agricultural production and market prices, which often have adverse fluctuations. In situations where natural disasters or adverse changes in the market occur, production may decrease or prices may fall, resulting in a decrease in the overall economic value of grain. From the comparison of traditional agricultural insurance, full-cost agricultural insurance, and planting income insurance, it is evident that the latter two provide a higher income security for farmers. This, in turn, helps to stabilize farmers’ income expectations, improve their production enthusiasm, and stabilize the source of funds for the next production cycle, ultimately leading to a stabilized grain planting area. Stable income expectations can also restrain the concerns of grain households about the input of production resources, moderately expand the input of factors, and ultimately promote the increase in the grain planting area.
Increase the application of agricultural machinery. Full-cost agricultural insurance and planting income insurance can effectively reduce the risk exposure of agricultural production and restrain the damage of agricultural production uncertainty to farmers. The total premium subsidy of full-cost agricultural insurance and planting income insurance exceeds 70%. These factors can reduce insurance costs while spreading risks, and enlarge the profit margin of grain production, which will encourage farmers to carry out grain production and optimize grain production methods. Mechanization is an effective way to optimize grain production. It improves efficiency, reduces pressure on food harvesting, and then minimizes unnecessary losses. Additionally, it reduces the unit area cost of labor and fertilizer, thereby improving the profit margin of grain growing. Ultimately, it promotes an increase in the grain planting area and expands the scale of grain production. Numerous studies have demonstrated that mechanization can enhance the scale of grain production and promote a ‘grain-oriented’ planting structure [
51,
52,
53,
54].
‘Implicit endorsement’ coexists with ‘rational economic man’. To ensure food security, the state has implemented various policies for all aspects of grain production. In addition to the full-cost agricultural insurance and planting income insurance in this study, the policies also include subsidies for arable land protection, minimum purchase price policies for rice and wheat, etc. These policies release a positive signal of the country’s emphasis on agriculture to grasp grain. Essentially, it is an endorsement to support grain production. This will encourage farmers to view grain production as more beneficial, not just as a means of breaking even or making a profit, so farmers will be more enthusiastic about planting grain, leading to an increase in the area dedicated to grain production and promoting a shift towards grain in the planting structure. However, in terms of grain production, individual decision-making is based on a cost–benefit analysis, assuming a ‘rational economic man’ [
55]. Some scholars have explained that farmers are rational economic people. Farmers compare the production costs and benefits of different crops when choosing what to grow on limited arable land. China’s small farmers are the primary producers of grain, and they face challenges due to limited land resources and weak economic strength. As a result, it is difficult for them to obtain full-cost agricultural insurance and planting income insurance to save costs and increase efficiency on a larger scale. In such situations, planting cash crops can be more profitable than planting grain crops when the unit cost is the same. Therefore, small farmers who are economically rational and driven by expected profits will take the initiative to adjust their planting structure and increase the planting area of cash crops. This is not conducive to a ‘grain-oriented’ planting structure. As a result of this rational economic decision, the positive impact of various food support policies, including full-cost agricultural insurance and planting income insurance, on farmers’ increase in grain planting area will be weakened.
Based on the above theoretical analysis, this study proposes research hypotheses (H1 and H2):
H1. Full-cost agricultural insurance and planting income insurance may have a positive impact on the increase in grain planting area.
H2. Full-cost agricultural insurance and planting income insurance may have a positive impact on the ‘grain-oriented’ of plantation structure.
Based on the literature review and analysis above, a graphical framework on agricultural insurance policy adjustments and a ‘grain-oriented’ planting structure can be presented (
Figure 2).
Driven by external factors. Food production has historically been closely linked to natural and human conditions. Natural conditions, such as climate, hydrology, terrain, and soil, and human conditions, such as market demand, policies, and regulations, transportation, and production technology, will affect the resource input, production, harvest, circulation, and transaction of food production. Both natural and human conditions vary regionally, affecting the characteristics of grain production.
The implementation of agricultural insurance is also influenced by these conditions. Farmers’ willingness to purchase planting income insurance is a key indicator of the effectiveness of agricultural insurance. Farmers’ purchasing intentions can be categorized as direct motivation and indirect motivation. Direct motivation refers to the economic compensation function of farmers’ desire for full-cost insurance and planting income insurance. Compared with price fluctuations, the occurrence of natural disasters often causes extreme losses to the grain output, so the purchase of planting income insurance will reduce their economic losses. Farmers are more likely to choose full-cost agricultural insurance and planting income insurance with a higher product guarantee level, which includes both income insurance pricing premium and loss detection standard. This is because the higher level of guarantee provides an indirect motive. This study analyses the direct motivation for the demand for agricultural insurance in the high-risk areas of agricultural production. In such areas, the probability of damage is high, and farmers have a strong risk awareness. Therefore, the demand for agricultural insurance is strong, and the guarantee function of agricultural insurance is better reflected. Conversely, in the low-risk areas of agricultural production, farmers’ risk awareness is relatively weak due to the low probability of damage, and the protective role of agricultural insurance is not easily reflected.
Based on the above background and theoretical analysis, this study proposes research hypotheses (H3):
H3. Regional agricultural risk degree may affect the effect of full-cost agricultural insurance and planting income insurance on grain planting area and planting structure.
4. Empirical Design and Descriptive Statistics
4.1. Sample and Source of Data
This study selects 527 data from 31 provinces from 2006 to 2022. The data in this paper are panel data. Total agricultural planting area, grain planting area, agricultural disaster area, producer price of planting industry, and total power of agricultural machinery were obtained from the
China Agricultural Statistical Yearbook. The employment rate of primary industry and fiscal expenditure on agriculture, forestry, and water conservancy were obtained from the
China Statistical Yearbook. The income and payout of agricultural insurance are from the
Statistical Yearbook of China Insurance. Some indexes have missing values, and the moving average method is used for interpolation. The descriptive statistics of variables are shown in
Table 1.
4.2. Variable Selection
The selection and statistical description of the variables are shown in
Table 1.
Explained variables: In order to evaluate the incentive effect of pilot policies of full-cost agricultural insurance and planting income insurance on the grain production area and ‘grain-oriented’ planting structure, based on the theoretical analysis above and combined with the research, there are three main explained variables: ➀ The total agricultural planting area. ➁ The absolute index of the grain planting area. ➂ The relative index of the proportion of the grain planting area to the total agricultural planting area. In addition, in order to reduce the influence of outliers and other factors on the regression results, this study conducted a logarithmic treatment of the crop planting area, like “Grain’”.
Core Explanatory Variable: The pilot and promotion of full-cost agricultural insurance and planting income insurance have inter-provincial temporal and spatial differences, based on the central documents, the pilot in Inner Mongolia and Liaoning in 2018, and the promotion to Heilongjiang, Hubei, Hunan, Jilin, Jiangxi, Anhui, Hebei, Henan, Jiangsu, Shandong, Sichuan, and other provinces in 2021. The core explanatory variable of this study is ‘Agricultural insurance policy adjustments’, and it is investigated whether the province is the pilot province of full-cost agricultural insurance and planting income insurance in the current year. If it is, the variable value is 1, otherwise it is 0.
Control Variables: Combined with the existing literature, this study selects the following four types of control variables. ➀ Agricultural production variable: Labor input. The agricultural production condition of each province is the primary factor affecting the grain planting area and planting structure. Labor input is selected and measured by the employment rate of the primary industry. ➁ The level of agricultural development and structural variables: total output value of agriculture, forestry, animal husbandry, and fishery, and the agricultural industrial structure. The level and structure of agricultural development may affect the status and capacity of food production. Among these variables, the agricultural industrial structure is measured by the proportion of the regional agricultural output value to the total output value of agriculture, forestry, animal husbandry, and fishery. ➂ The development variable of agricultural insurance: the amount of agricultural insurance income and agricultural insurance compensation. Agricultural insurance income can reflect farmers’ demand for agricultural insurance, and the greater the value, the greater the demand for agricultural insurance. The amount of agricultural insurance payments can reflect the level of agricultural security to a certain extent. Higher levels of security can incentivize farmers to increase the planting areas, adjust their planting structure, and promote a ‘grain-oriented’ approach. This can lead to an increase in grain production. ➃ Other variables: the level of agricultural risk, the level of agricultural financial support, the price of planting and production. Among them: the agricultural risk level is measured by the agricultural disaster area; the level of agricultural financial support is measured by the fiscal expenditure on agriculture, forestry, and water resources. The planting production price is measured by the planting production price index, which takes the price of the previous year as 100, and reflects the price fluctuation in the form of the index, thus affecting the production behavior of farmers.
4.3. Econometric Models and Estimation
4.3.1. Benchmark Model
In order to verify the theoretical hypothesis, this study takes the pilot of full-cost agricultural insurance and planting income insurance as the natural experiment, and uses the multi-stage DID model to evaluate the incentive effect of full-cost agricultural insurance and planting income insurance on the grain planting area and planting structure. Therefore, the Equation (
1) is as follows:
where the subscript
i represents the province (
i = 1, 2, 3,
…, 31),
t denotes the year (
t = 2006, 2007,
…, 2022);
represents the planting area of grain or the proportion of the planting area of grain.
indicates whether the pilot of full-cost agricultural insurance and planting income insurance was implemented in the province
i and in the year
t. If otherwise, it is 0;
represents a set of control variables;
represents the province dummy variable, controlling the individual factors that affect the planting area and planting structure of food crops but do not change with time;
represents the time dummy variable, which controls the time factors affecting all provinces;
represents a random disturbance term.
4.3.2. Mechanism Testing Model
According to the results of the baseline analysis, the pilot programs of full-cost agricultural insurance and planting income insurance significantly promoted the increase in the grain planting area and the ‘grain-oriented’ planting structure. Based on a theoretical analysis, the influence mechanism of full-cost agricultural insurance and planting income insurance on the grain planting area and planting structure is mainly about stable income expectations, increase the application of agricultural machinery, ‘implicit endorsement’ coexists with ‘rational economic man’, and driven by external factors. It can be seen from the above that ‘implicit endorsement’ coexists with ‘rational economic man’ making full-cost agricultural insurance and planting income insurance have uncertain influence directions on grain production. External factors to promote the analysis of human and natural conditions, covering a wide range of aspects, is not suitable for specific analysis. Stable income expectations reflect the guarantee of agricultural insurance for the income risk of agricultural products. Due to the compensatory nature of agricultural insurance itself, the role of agricultural insurance is mainly to compensate for losses rather than increase additional income, and the increase in agricultural operation income mainly comes from the cost saving and efficiency increase brought about by the improvement of production mode, including mechanized production. Therefore, this study analyzes the mechanism of agricultural insurance—increasing the application of agricultural machinery—grain planting area and planting structure. The Equations are as follows:
where
is the intermediate variable of the application of agricultural machinery. The analysis idea of intermediary effect is as follows: Firstly, the benchmark regression is performed on Equation (
1), then the regression on Equation (
2) is used to test the influence of the agricultural insurance pilot on the intermediary variables, and finally, the intermediary effect analysis framework is obtained by substituting Equation (
2) into Equation (
3). At the same time, the Sobel test and Bootstrap test were carried out in order to prevent the defects of three-step method to test the mediation effect.