Abstract: The present structure and coupling situation of agricultural system in the loess hilly region was formed under the influence of soil and water conservation policy. Agricultural ecological economic system may develop to a certain direction and form a new coupling situation through regulating the present coupling relationship between agricultural industry and resources. It had a practical significance to comprehensively clarify and assess the coupling interactions of the two important factors of the agricultural economic system. Due to multi-external policies and human interventions that acted on the agricultural ecological economic system, the indexes characterizing policy and farmers’ decision and behavior in the system were not directly observable (latent variables). Traditional models (e.g., coupled dynamic systems model, coupled degree model, gray system analysis, etc.) either ignored or partially treated these indexes. The complex interactions and feedbacks among the system indexes were not adequately explained by these models. This paper employed the structure equation model to explore the interactive relationships and functional paths across agricultural industry and resources under the influence of soil/water conservation policies in the loess hilly region, with a proxy farmer-survey from Wuqi County, Shaanxi Province, as the data resource. First, soil/water conservation policy, farmer behavior, agricultural resource and environment, agricultural industry development and coupling situation of agriculture system were set as 5 latent variables. And the correspondingly measurable indexes were selected. Then, 9 hypotheses about coupling relationship between agricultural industry and resources of the studied area were advanced. On this base, the model of agricultural industry-resources system coupling relationship was established. Fit test of the model showed desired effects. The model results showed that soil/water conservation policies improved regional agricultural resources conditions (with path coefficient of 0.62). This suggested that the policies were consistent with ecological targets. However, the policies inhibited positive farmer behavior in terms of resource utilization and industry management (with path coefficient of -0.22). This implied that the policies were some sort of disincentive and incompatible with farmer activity. Farmer behavior not only affected the state of system coupling directly (with path coefficient of 0.42), but also indirectly through promoting agro-industry development (with indirect path coefficient of 0.61×0.35 = 0.21). This also suggested that farmers’ production and decision-making behavior was a critical factor in the coupling of the system. Because of the policy mandatory provisions for resources utilization and inhabitation of farmer behavior, the regional agricultural resources environment was not supportive of agro-industry development (with path coefficient of -0.24). That is to say it induced a detestable local situation between agro-industry development and agro-resources environment. To optimize agro-industry and resources coupling of the loess hilly region, a full utilization of the present resources environment was recommended.