Can reducing agricultural trade costs foster the transformation of the agrifood system? Evidence from China

Abstract

Trade costs play a crucial role in influencing food expenditure and residents' food choices, which in turn affects their dietary quality. In this paper, the China CGE model was integrated with household survey data to further examine the impact of agricultural trade costs reduction on the agrifood system, capturing variations across food categories and household groups. Our findings indicate that, reducing domestic agricultural trade costs lowers food prices, expands food consumption and production, and improves residents' dietary quality, especially for low-income groups. When domestic agricultural trade costs decrease by 10 % annually from 2025 to 2030, fruit, milk, and aquatic product prices are projected to drop by 15.33 %, 12.88 %, and 10.39 %, respectively. This increase in the consumption of higher-value, currently under-consumed foods is anticipated to promote a more balanced diet, improving dietary quality for 36.78 % of rural residents and 39.07 % of urban residents. Consumption changes will also affect agricultural production and the macro-economy through inter-sectoral linkages. The reduction in domestic agricultural trade costs leads to increased production levels and stimulates growth in both agriculture and the agrifood system GDP. Future efforts should focus on enhancing cold chain logistics for fresh produce, standardizing the Green Channel policy, and strengthening the sustainability of China's agrifood system.