In recent years, the Chinese government has continued dispensing Grain Direct Subsidy（GDS）to farmers growing staple crops such as wheat to boost their productivity and income. By examining results of a questionnaire survey conducted in a village in a major wheat production area of Shandong Province, this study analyzes characteristics of small-scale farms in conjunction with effects of GDS, and discusses directions different types of farms will take. Sixty-two studied farm households were classified, according to crops they produce, into following categories : Type-1, “Staple-food production,” which grows staple food crops such as wheat with small acreage, with limited labor force and low inputs of production materials, employing efficient labor, achieving relatively higher productivity, and seeking non-farming employment; Type-2, “Economic-crop production,” which grows non-staple food crops such as vegetables with higher inputs of labor and material, are labor-intensive, combine incomes from farming and non-farming employment; and Type-3, “Mix-crop production,” which grows both types of crops with larger acreage, using abundant labor force, oftentimes possessing livestock, seeking non-farming employment, and achieving the highest income. GDS was found to have palpably positive effects on stabilization of income only in Type-1 among three. While GDS’s impact on stable income of Type-3 was less tangible, it had substantial effects on establishing financial foundations for further farm development. Toward the future, three Types are expected to follow different courses of development. Type-1 will contribute to stabilizing food production in the area, through farm-mechanization toward further streamlining and higher labor productivity, and deepening its dependence on non-farming employment. Type-2 will achieve stable production of economic crops and better income by obtaining relevant information, such as production technologies and marketing. Type-3 will pursue economic rationality and stability through combining crop and livestock production, and be expected to become a farming model for the region.