Coordination In Agricultural Supply Chain Through Option Contracts

Agricultural supply chain is one of the hotspot questions in the world. At present, our country's innovation of agricultural is focus on large scale management.Contract farming.which is make up of company and farmer or Peasants' Cooperative Organizations, is one of the method to develop it. This mechanism is good for solve the problem of small product and big market, so it is welcomed by farmers and develop very soon. But with development, a lot of problem comes out; nonperformance between the two side is one of the most serious problem. So, Contract Farming is in the hot water of breach of faith.Now, government tries to harmonize the conflict. Since asymmetric information and impertinency distribtion is the key problem.We need to set up a contract to let supply chain more effective.In this paper, we first introduce exoterica about supply chain ,stimulant , analysis the problem and status of agricultural supply chain.Then bring forwardharmonize agricultural supply chain thorough option contract.Second, we find the asymmetric information and double bounded is the key probelme after analyse the profit complexion under centralized and decentralize,So in order to improve profit, we set up option contract and use the principle of imformation discriminate to discuss how can Peasants' Cooperative Organizations set up the option mechanism in order to share the true imformation owned by company.And discuss how can the two side makd their best design.Then validate the result through a sample.Government join in agricultural supply chain as third authority and in order to optimize the whole profit of supply chain and distribute it between Peasants' Cooperative Organizations and company reasonablely.So next we set up the option contract based on the whole price contract model,we willdiscuss how can government design the option contract to get the goal and how can the two side make design to get the most profit .Then we discuss the infection of option price to the company and Peasants' Cooperative Organizations,we go deep into how to set up the price to realize the improvement and make a proper share of the supply chain between company and Peasants' Cooperative Organizations.At last simulation result show that option contracts can optimize the the agricultural supply chain and offer a way to harmonize the share of profit between the company and Peasants' Cooperative Organizations more properly.