Research On Agriculture Supply Chain Contract Choices And Cooperative Internal Goverance

With the release of Central Document No.1 of 2015, the central government has focused on agriculture issues for 12 years. With central and local government attaching great attention to agricultural industrialization, China’s agricultural production ability releases a strong potential power, cereal output achieved a historic “Eleventh connected increase” from 2004 to 2014. Whether farmers’ income are increasing is a key indicator to the achievements of agricultural industrialization, but increasing output without increasing income phenomena often occurs. How to encourage farmers to actively participate in agriculture industrial management and share more of the cake has attracted academic and industry attention.This paper first determines the optimal strategies of centralized decision-making in agricultural supply chain, and takes farmer’s risk aversion preference into the analysis of the efforts decisions in “farmer+market” mode; then compares the loosen “firm+farmer” mode with the tight “firm+farmer” mode, and compares farmer’s efforts decisions and utilities with those in “farmer+market” mode; when analyzing the reason of choosing “firm+farmer” mode, the reasons lie in the upstream interests inconsistent with downstream interests, uneven balance of power and so on, “firm+farmer” mode failed to reach a fully coordination in agricultural supply chain. So this paper further explores the effect of “firm+cooperative +farmer” mode in improving the efficiency of supply chain operations. The result shows that “firm+cooperative+farmer” mode can fully coordinate supply chain under certain conditions. The efficient operation of “firm+cooperative+farmer” mode relies on cooperative governance, but cooperative faces members free-riding problem in reality, which hinders cooperative to play a coordinating role. This paper incorporates cooperative farmers’ strong reciprocity and fairness preferences into evolution game model to explore the possible measures of cooperative governance from the angle of farmer’s behavior decides the quality of agriculture products.The results of this paper show that:(1) farmers entirely endure market risk in “farmer+market” mode, and those with strong risk aversion level make inadequate production and sales effort. But “firm+farmer” mode can greatly reduce the risk of farmers; compared with “farmer+market” mode, loosen “firm+farmer” mode can improve the efforts level in production processes and marketing processes when farmer holds a high degree of risk aversion; and farmer’s utility achieves an improvement;(2) in tight “firm+farmer” mode, the wholesale price first increase then decrease with cost sharing coefficient, the efforts level in tight “firm+farmer” mode can be higher than that in loose type, and tight “firm+farmer” mode improves the farmer, firm and the whole supply chain’s utility levels at the same time;(3) compared with “firm+farmer” mode, the effort exerting enthusiasm of both the firm and the farmer will be further stimulated and the effort levels will be higher in “firm+cooperative+ farmer” mode;(4) farmer’s profit level is positively correlated with the cooperative negotiation skills, when the cooperative has a relatively strong bargaining power, farmer’s profit level will be higher in “firm+cooperative+farmer” mode than in “firm+farmer” mode will do, even if the cooperative specifies a higher retention rate of capital; when the cooperative’s bargaining power was within a specific range, both the profits of the firm and farmer can receive a Pareto improvement;(5) strong unfair aversion of compliance farmers’ and weak shame of free riding farmers negatively result in cooperative’s falling into the dilemma of producing low-quality products; nevertheless, strong reciprocity tendency of compliance farmers is positively conducive to enhance co-production stability; additionally, the increase of the proportion of farmers in the initial stage of compliance, the reduction of additional costs for high-quality products and the improvement of the quality markup of price under certain conditions are all helpful for a healthier state of production specification cooperation.