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This article first reviews the development of food prices in China since 2000. The authors find that despite tremendous price fluctuations in the international market in 2007–08, major staple crops (rice, wheat, and maize) in the domestic market were shielded from the volatility of the international market. This price stability can be partly attributed to Chinese government’s food-security policies in stimulating grain production and smoothing domestic prices. Household data reveal that farmers’ supply response is affected by prices, market access, household assets, and farmer experience. In addition, poor families are less responsive to market signals, and the impact of poverty on grain production is indirect.

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