Market demand and government regulation for quality grading system of agricultural products in China

The quality grading system pushed forward by the Chinese government since 2011, aiming to seek a high-quality increase in agricultural development, has not been well implemented in retail market mainly due to insufficient market demand for quality grades and ineffective regulatory measure for manufacturers' violation. However, little research lays emphasis on the existing problems and feasible countermeasures of quality grading system, especially taking that of China as an example. This study applies the ordered logit model to investigate the underlying reasons of consumers' little concern about quality grades using 2018 nationwide consumer initial and tracking survey data, designs a governmental regulatory scheme for manufacturers’ falsifying grade labeling based on cost-benefit principle and probability statistics method using supermarket data, and evaluates its comparative advantages over alternative regulatory patterns of China and U.S. The findings indicate that consumers with limited knowledge of grading system, weak preference for grading attributes and distrust in the quality of graded agricultural products tend to concern little about quality grades in their purchasing decisions, and that the regulatory scheme of punitive administrative penalty designed by this study has the advantages of higher penalty and lower execution cost compared to Chinese and U.S. current regulatory patterns. This study calls for a more appropriate labeling method, a more reasonable attributes selection and a stricter monitoring system from a consumer perspective, and initially proposes the relatively optimal choice for grading system regulation from the government perspective.