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I understand that communes, later, "production units", and eventually, households sold food to the state at a set price. If the state wants to pay a lower-than-market price for food, do they simply give the food they now own to those in need, or export it, what is done?

(POST-MAO china, 1976 - 1985+)

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  • Most states maintain food banks to control crop prices. Is this question answered by Wikipedia? ". . .system had the effect of both incentivizing production, while stabilizing prices to protect households from the drop in market prices caused by the boom in agricultural production" (emphasis added) For more information see How China escaped shock therapy : the market reform debate NOTE: not obvious unless you're familiar with this period of history.
    – MCW
    Feb 7, 2023 at 12:38
  • Right, but I am asking what happened with the food in the "food bank"---if that's even what China had. So, did they distribute it to the poor, keep food for storage for famine prevention, etc, or what? I understand the economic effect of the household responsibility system and multi-tier price system, I am asking what the state did with the food.
    – john
    Feb 7, 2023 at 14:17
  • I can't answer for China, but for most food storage, they are then resold at controlled prices.
    – MCW
    Feb 7, 2023 at 14:24

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The Chinese government, from 1978/9 onward, bought food from rural farmers to supply urban consumers at a subsidised price. This was done as part of their overall policy to ensure/promote industrialisation, beginning with Deng Xiaoping.

From Unravelling China's Food Security Puzzle, 1979–2008 (2018) (pdf). p.805:

To support China’s industrialization, the urban food supply was protected and urban food prices were heavily subsidized by the reforming government. The government was the main trader between food producers and food consumers. It performed the role of food monopsonist in the farming sector and monopolist in the urban industrial sector, and largely controlled the food supply from the agricultural to the industrial regions.... The government had to meet the demands of the urban food consumers by procuring food from the rural producers and then selling it on.

p. 808:

The research shows that the Chinese government’s notion of food security includes the aims of not only maximizing grain output (food availability) but also ensuring a subsidized low-priced urban grain supply (food accessibility), implying a rural-to-urban welfare transfer via the state food monopoly mechanism.

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