746 Economic Development and Cultural Change breakthroughs and greater extension efforts in the production of rice and wheat have pushed their yields closer to their frontiers than in the case of maize. Interviews with breeders from multinational seed corporations ommonly reveal that the yield potential in all crops still exists, includ ing rice and wheat, but that it is higher in maize. A number of other factors similarly will affect future supply ment in agricultural infrastructure, especially irrigation, has been important determinant of Chinas agricultural growth in recent decades, 37 Irrigation investment and the stock of facilities have followed patterns similar to those for research, falling in the early reform period before recovering in recent years. Trends in environmental degradation, includ ing erosion, salinization, and loss of cultivated land show that it may be that considerable stress is being put on the agricultural land base. 3Ero- sion and salinization have increased since the 1970s, although in a some hat erratic pattern, and these factors have affected output of rice, wheat, maize, and other agricultural products. 9 V. A Framework for Forecasting Chinas Grain Supply and Demand The major components of this article's forecasting framework include a supply model for the rice, wheat, maize, other grain, and cash-cropping sectors of the agricultural economy, while demand models are specified separately for rural and urban consumers for rice, wheat, other grain, and six animal products. Real world price projections are generated by IMPACT, a partial equilibrium global trade model developed by M. Rose grant, M. Agcaoili, and N. Perez. o Grain supply is assumed to respond to the crop's own price, prices of other crops, quasi-fixed inputs, and the off-farm wage. Output also is a function of the stock of agricultural research, the stock of irrigation infrastructure and three environmental factors -erosion salinization and the breakdown of the local environment 4 The full set of results and detailed discussion of the model can be found in J. Huang, M. Rosegrant, and S. Rozelle. 42 Grain consumption is divided into two parts: grain that is directly consumed for food and that which is fed to animals and consumed indi- rectly. Direct food equations are divided into rice, wheat, and other Food Grain Demand Rural and urban food grain demand are modeled separately for several reasons. Consumption patterns are inherently different for rural and ban consumers. 4 Income differentials, expenditure growth, rates of hange of population, and other demographic factors also vary dramati ally between rural and urban regions. The effect of urbanization is ac counted for by multiplying per capita grain projections for each sector Copyright 1999. All rights reservedCopyright © 1999. All rights reserved