China’s Agricultural Products Circulation Form Of Organization And Governance Mechanism

With the deepening of China’s reform and opening up, individual farmers havebecome the basic unit of agricultural producing and circulation of agriculturalproducts. On this basis, China’s agricultural product circulation form of organizationhas been becoming more flexible, which is currently according with the situation ofdispersed farmers and small-scale agricultural cultivation. However, under thesituation of more circulation links, low circulation efficiency and high transaction costChina’s agricultural product circulation organization cannot have a scale andsystematic development. Therefore, the problem of protecting the interests oftransaction subjects in the organization, reducing transaction cost and improvingtrading performance in the same time is studied in this paper.Firstly, the status analysis of china’s agricultural product circulation organizationis made in this paper, based on which, transaction cost theory is used to analyze theeconomic and social dimensions of agricultural product circulation organization. Theresults are that third-party intervention in the organization plays an important role inthe number of transactions and trading stability. Compared to other forms oforganization, the organization form of "farmers+intermediary organizations+leading enterprises" makes the farmers have the advantage in gaining the rights andstability in terms of the distribution of economic benefits.Secondly, the frequently occurring default phenomenon resulted from thebounded rationality and opportunism lead to high transaction cost and declinedtrading performance. In view of this situation, the game theory analysis is used toanalyze the trading relationship of the transaction subjects. The conclusion is that themaintenance of contractual stability and the penalties for the breach of contract shouldbe improved in order to protect the balance of organization’s interests.Finally, based on the preceding analysis and China’s specific national conditions,the policy to promote the development of China’s agricultural product circulation organization is put forward in this paper.Thirdly, the governance mechanisms to reduce transaction costs of differentagricultural organizations are analyzed in this paper, which including marketmechanisms, relationship and contractual mechanism. The relationship mechanismhas played a very important role in various forms of organization. Therefore, theemphasis of China’s rural social relationships inherent in this organization will greatlypromote the development of China’s agricultural product circulation organization.