Research On The Selection Of Farmers Financing Mode And Government Intervention Mechanism In The Supply Chain Of Contract Farming

The issues concerning agriculture,rural areas and farmers are fundamental to the national economy and people’s livelihood.Implementing the rural revitalization strategy is an urgent strategy to solve the major social problems in the new era.However,agriculture has the characteristics of weak quality,high risk and instability,which make it difficult for farmers to obtain sufficient financial resources through traditional financing,and severely restrict the development of agricultural industrialization.The development of the supply chain finance can help to solve the problem of financing difficulties in agriculture.In addition,farmers are in an absolutely inferior position in the supply chain,which makes it difficult for them to obtain income security through supply chain finance in a completely free market.Therefore,the intervention mechanism of the government is very important for the improvement of China’s agricultural supply chain finance.Financing modes can have a significant impact on farmers’ income.Presently,farmers’ financing mainly includes supply chain internal financing and supply chain external financing.Bank credit financing refers to the tripartite cooperation among companies,farmers and banks.Bank provide loans to farmers through agricultural orders from company and farmers;trade credit financing means that the company provides financing for farmers through prepayment.These two financing modes have their own defects.Due to the randomness of farmers’ output,many research conclusions of supply chain finance in traditional manufacturing industry are not applicable to contract agriculture.Based on this,the thesis takes the contract agriculture supply chain as the research object,aiming at different financing modes and government intervention mechanism,to establish the game optimization model under the random output,describe the decision-making motivation of each subject of the supply chain,and guide the farmers to choose a better financing strategy.This thesis focuses on the agricultural supply chain’s common financial constraints and characteristics of bankruptcy risk,and constructs the contract agricultural supply chain model around different farmers financing modes.The main work and innovation of this thesis are as follows:Consider the choice of farmers financing mode without government intervention.Based on actual cases,this chapter establishes three supply chain financing models(including trade credit model,bank credit model and portfolio credit model).It suggests that :(1)When farmers choose bank credit,the increase of bank interest rate can lead to the increase of production cost of farmers and the decrease of production input,which reduces the income of both farmers and companies.However,in the case of portfolio credit,the reduction of bank interest rate is not always a good thing for farmers,and too high or too low bank interest rate will damage the income of farmers.(2)When the production cycle of farmers is very short,farmers have the highest income under trade credit;When the production cycle is in the middle region,farmers’ income is the highest under the combination credit.When the production cycle is long,farmers benefit most from bank credit.(3)When the uncertainty of farmers’ output(initial capital)is low(high),farmers will choose trade credit;When the uncertainty of farmers’ output(initial capital)is in the middle region,farmers will choose trade credit.When the uncertainty of farmers’ output(initial capital)is high(low),farmers will choose bank credit.Consider farmers’ choice of financing mode under the government risk compensation policy.In this chapter,on the basis of considering the randomness of agricultural products output,the risk of farmers’ bankruptcy and the restriction of government subsidies,the researcher established the decision-making model of the agricultural order supply chain composed of the company,the farmer and the government,obtained the equilibrium solution of the bank credit and trade credit model under the intervention of the government,and gained the strategy of farmers’ mode selection.Findings are as follows:(1)When the government budget and production cost of farmers are low,farmers choose trade credit loans;when the fiscal budget and production cost of farmers are high,farmers choose bank credit loans.(2)For the government,when the government’s financial budget is low,the government should encourage companies with abundant funds to provide production funds for farmers.Only by the tripartite cooperation of the government,companies and farmers,can farmers’ income be effectively improved,and the investment yield and the consumer surplus be higher.When the fiscal budget is low,the social welfare under the trade credit model is higher.And when the fiscal budget is high,the social welfare under the bank credit model is higher.(3)Output uncertainty has a greater impact on trade credit.When output uncertainty is low,farmers’ income is higher under trade credit.While when output uncertainty is high,farmers’ income is higher under bank credit.Considering the supply chain of agricultural products under the government discount interest policy,this chapter adopts the contract agriculture model to construct the contract agriculture supply chain system composed of the government,the bank,two agricultural processing enterprises and two farmers,and explores how the government optimizes the subsidy mechanism to help the farmers who are constrained by funds to improve their output and income.Results suggest that when all farmers need financing:(1)For farmers with high production efficiency,if the government aims to increase the income of farmers,it only needs to provide a lower discount rate;However,if the government aims at maximizing social welfare and the fierce competition among companies is weak(strong),the government should set a high(low)discount rate to maximize social welfare.This finding is helpful for the government to formulate appropriate subsidies for agricultural areas with relatively advanced production methods.(2)When the farmers’ production efficiency is high enough(low),the agricultural output invested by the government’s social welfare subsidy policy is larger(smaller)than that of the government’s poverty alleviation subsidy policy.(3)When one farmer needs financing but the other does not,the production cost is very small,and the government subsidies seriously damage the income of farmers who do not need financing,which can lead to the decrease of the total income of farmers.