How does Agricultural Input Price Effect on Farmers’ Income:Experimental Study from Sugarcane Sector

Based on the time sequential data from 1980 to 2009 and by using the impulse response function and forecast variance, this paper establishes vector autoregressive model to analyze the dynamic relation between the rise of agricultural input price and the income of sugarcane farmers. The results indicate that sugarcane farmers’ net income shows negative response to the rising of agricultural input price, which tends to be stable; but the increase of agricultural input price shows faint response to the increase of sugarcane farmers’ net income. To prevent the negative impact of sharply the increasing agricultural input price on sugarcane farmers’ income, government should improve the controlling mechanism of agricultural input, eliminate subsidy policies for the production and circulation of agricultural input, provide subsidies for sugarcane farmers directly, expand the range of subsidies for agricultural input, improve the service of agricultural extension, reduce the cost of farmers’ using agricultural input, make the regular laws protect the benefit of sugarcane farmers.