An Agent-based Simulation Model of Wheat Market Operation: The Benefit of Support Price

Abstract

Grain security is one of the most important issues worldwide. Many developing countries, including China, have adopted the Agriculture Support Price (ASP) program to stimulate farmers’ enthusiasm for growing grain, to ensure self-sufficiency in grain and the stable development of the grain market. To propose decision support for the government in designing a more reasonable support price in the ASP program, we formulate an agent-based model to simulate the operation of the wheat market in the harvest period. To formulate the formation process of the market price influenced by farmers’ expected sale price, processors’ expected purchase price, and the ASP, the time series and regression methods are adopted. Based on the proposed market price model, to quantitatively analyze the grain transaction process and the ASP program’s impacts on market agents, we develop an agent-based simulation model to describe the adaptive evolution and interaction among market agents. Furthermore, we validate and implement the simulation model with public wheat market data. Finally, insights and suggestions about the decision of the ASP program are provided.

Keywords

Agent-based simulation (ABS) / wheat market / agriculture support price / decision support / public policy

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Systems Engineering Society of China and Springer-Verlag GmbH Germany