Research On The Vertical Coordination Model Selection Of Agricultural Transaction

The reorganization of the global food supply chain shift small farmers' food production to agro-industrial integration which is the contract production and vertical integration. Such a shift excludes small farmers in the lucrative transaction opportunities, and has a negative impact on the welfare of small farmers. In order to make major partners in the transaction to get more profits, vertical coordination sets entry barrier for other companies, which can avoid monopoly processing enterprises to hold most or all unequal occupancy of the rent, rising productivity but sharing no benefit to the farmers. How can small farmers improve agricultural production inputs and technology, reduce the risk of agricultural production and marketing, and ultimately get higher revenue, through vertical coordination. Smallholders are typical characteristics of China's agricultural production in the peasant economy system. In addition, there are many specific patterns of vertical cooperation model. Which kind should Chinese farmers select? How can they participate in such a model? These are real and urgent problems placed in front of us.Taking Chinese fresh tea transaction as an example, this thesis firstly investigates characteristics of fresh tea production and transaction, discusses farmers' major vertical coordination model in fresh tea transaction, which provides a reference for later study. Secondly, this thesis reviews the economic system's evolution of the domestic tea industry and empirically analyzes the impact on the international competitiveness of Chinese tea. Thirdly, from the microscopic point of farmers, based on field survey data and econometric analysis methods, this thesis does a quantitative analysis on farmers'selection performance of vertical coordination model in agricultural transaction, and influential factor of farmers'intention to select vertical coordination model. Finally, this paper inspects realistic restrictive factors of farmers' vertical coordination model selection in agricultural products transaction. As a result, the thesis explores ways and means of perfect formation and efficient model of vertical coordination in farmers'agricultural transaction, provides theoretical and empirical evidence to lead farmers to adapt to changes in domestic and foreign markets, and improves farmers'competitiveness and the development of modern agriculture and tea industry economy system in and abroad.In order to study these problems, this thesis makes some innovations in the following aspects. First, from the point of the theoretical analysis tools, this thesis makes three-level framework analysis model of Williamson's transaction governance model selection, which emphasizes the impact of the system environment on the choice behavior of principal transactions, makes the research conclusion more scientific, and improves the practical pertinence of policy recommendations. Second, from the point of that different impact of vertical cooperative model selection on transaction performance in tea transaction, this thesis builds up semi-logarithmic multi-dimensional linear regression analysis model based on cross-section data, analyzing connection between of the tea transaction performance and closely degree of vertical coordination. Third, from the point of impact factors of vertical cooperative model on preferences in the tea transaction, this thesis adopts ordinal Logistic model, improving analysis accuracy of vertical cooperative model selection intention's impact factors in the tea transaction.The main research content and important points are as follows:Chapter I is the introduction. This chapter focuses on the realistic background, research objectives, basic concepts involved, basic research methods and technical line of the research. Also, it includes the innovation, drawback of this paper and the problems needed to be further solved are proposed at last.Chapter II defines general analytical framework. This chapter explains agricultural production transaction efficiency and relationship of appropriate scale operation and family operation, serving as a logical starting point of the study. It also reviews the basic theory of vertical coordination issues in agricultural transaction, summarizes and refers to results of theoretical and empirical research of preeminent scholars, on the basis of which, proposes the general analytical framework proposed in this paper——expanded Williamson paradigm. The results show that agricultural production transaction is inefficient and appropriate scale operation is compatible with the family operation. The transaction frequency, transaction costs, uncertainty; asset specificity characteristics of such transactions are to determine the farmers' vertical coordination model selection factors in agricultural products transaction transactions. Production characteristics, farmers' family characteristics, social capital characteristics, personal characteristics of head of household, and geographical characteristics are important factors of vertical coordination model selection in agricultural transaction.Chapter III investigates general economic characteristics of tea. Based on transaction cost theory, combining basic technical requirements for tea production, this chapter examines the basic characteristics of tea production, processing and marketing, and probes into the organization properties of farmers fresh tea transactions. The results show that asset specificity is strong and transaction frequency is high. There is some uncertainty in production fresh tea and preliminary processing, and market transaction model is not suitable for fresh tea transaction. But which kind of vertical coordination model is best suit for fresh tea transaction? This is to be determined by empirical test.Chapter IV examines evolution of vertical coordination model of Chinese farmers' fresh tea transaction. This chapter reviews evolution process of vertical coordination model in the Chinese fresh tea transaction since foundation of the People's Republic of China, empirically analyses economic system market reform in tea industry on the international competitiveness of Chinese tea, and explains its reasons from the point of view of transaction cost theory. The results showed that as industrialization process of agriculture can not keep up with the pace of market reform, originally provided by the planned economic system the organizational functions encounter the absence of main body of functions, market-oriented reforms transformed into the reform of disorganization, market transaction model is not efficient in farmers'fresh tea transaction. We should strengthen the supply chain management, change the current market model-based governance model of vertical collaboration, and actively explore the new model of vertical coordination, the sales contract, cooperatives, production contracts and vertical integration as the representative.Chapter V studies the performance of different vertical collaborative model. Based on field survey data, from the standpoint of tea farmers' income, this chapter investigates fresh tea transaction performance of different vertical collaborative model. The results show that tight vertical coordination mode helps farmers increase performance. When performance of production contracts is best, performance of market transaction models is low, and performance of the false vertical integration model that excludes division of work and cooperation is lowest.Chapter VI investigates influential factors of vertical coordination model on the farmers'preference in fresh tea transaction. Based on field survey data, under the guidance of Williamson transaction cost theory, reasonably using results of other scholars' transaction cost theory and empirical research results transaction cost theory and empirical research for reference, this chapter investigates the factor of vertical coordination model on the farmers'preference in fresh tea transaction. The results show that reduction of transaction costs and transaction risk is the main cause for tea farmers selecting the vertical coordination model. Furthermore, the tea farmers' characteristics of production, family, personality and social capital also have some impact on their intention to choose vertical coordination model. Especially, due to the small scale of production that caused by the peasant economy system, the tea farmers engage in part-time farming and take sideline production as main agricultural production, which restricts the tea farmers' intention to choose vertical coordination model to a large extent.Chapter VII studies vertical coordination model in fresh tea transaction of major foreign tea producing countries. This chapter horizontally contrasts vertical coordination model in transaction of fresh tea in the world's major tea producing countries and tea developed economies, such as India, Kenya, Sri Lanka and Japan, summarizes law of vertical coordination model selection in the fresh tea transaction, provides reference to contrive optimal vertical coordination model in Chinese farmers' fresh tea transaction. This chapter notes that small-scale tea farmers opt for the special compound governance structure based on government governance. Essentially, there is no pure market governance in fresh tea transaction of these countries.Chapter VIII analyses the vertical coordination mechanism pathway in fresh tea transaction. Based on self-compliance mechanism and on-field survey data, aim at getting rid of realistic obstacles of tea farmers faced in selection of the production contract model. The results show that, under the system of small-scale agricultrual economy, there are many obstacles for peasants to choose production contract model, such as scattered and small-scale of tea-peasants' distribution, cumbersome tea production processes, weakness of farmers' professional co-operatives and leading enterprise with short history and less power,whose driving ability is poor. This chapter designs countermeasures which we should develop professional cooperative agency of farmers and leading enterprises, introduce production contract to the model of "leading enterprises+farmers professional cooperative+ farmers", establish model of "company+cooperative+farmer" as cooperative an intermediary, through institutional innovation and the implementation of the model provide a good institutional environment, and encourage qualified enterprises and farmers cooperatives leading cross-shareholdings, strategic invest.Chapter IX is the conclusion and policy implications. This chapter summarizes the main results of the thesis and proposes corresponding policy recommendations.