Abstract: Since the reform and opening up, the main objectives of China’s grain subsidy policy are: first, to stabilize grain output, second, to stabilize grain prices, and third, to increase farmers’ income. However, through combing, it is found that the long-term adoption of price support as a tool in the grain subsidy policy cannot achieve the above three objectives at the same time, on the contrary, it will lead to such problems as systematic deviation of the policy. In this regard, by introducing the idea of “replacing subsidy with insurance and combining insurance with subsidy”, a regulation tool to protect farmers’ income is added in the link of grain production, so as to enrich the policy tools to achieve the goal of grain regulation. This paper also makes an analysis of the policy idea and mechanism of “combination of insurance and subsidy”, the results show that the application of the grain subsidy policy of “combination of insurance and subsidy” will play significant roles in relieving the financial burden, improving the subsidy efficiency and perfecting the agricultural insurance system.

Key words: grain subsidy, macro-regulation, replacing subsidy with insurance, price support, income security