Market-oriented policy reforms often have important effects on farm-level grain production and utilisation decisions in developing countries. China’s grain farmers are of particular interest because of China’s importance in world grain markets and because of China’s recent major agricultural policy advances and retrenchments. An empirical evaluation of market liberalisation among farmers located in two provinces in China on farm-level wheat consumption, market sales and on-farm storage during 1994 is presented. The results indicate that policymakers should account for such changes in farm household behaviour in designing and assessing the consequence ofmarket liberalisation programs for agricultural sectors in developing countries.