Abstract: Domestic wheat price support policy has produced price distortions while raising grain production, which affects the welfare of the downstream link in the wheat industry chain. Based on the reality of wheat circulation monopoly in domestic, this article analyses the welfare changes of wheat processing industry and consumer in the process of conversion from price support policy to the target price policy. It shows that the price support policy makes welfare losses of the wheat processing industry, the higher degree of monopoly of grain circulation, the greater loss of wheat processing industry; in the case of increasing price difference between domestic and abroad, the consumer has changed from welfare improvement to welfare loss. The conclusion of this study means that taking the target price policy in the wheat grain storage link can bring welfare improvements to both wheat processing industry and consumer.

Key words: market structure, welfare change, industry chain