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Comparison analysis on the bilateral efforts of farmers and the third-party organization under multiple contract modes

Lanying Sun (College of Management and Economics, Tianjin University, Tianjin, China)
Xiaoyan Li (College of Management and Economics, Tianjin University, Tianjin, China)

Kybernetes

ISSN: 0368-492X

Article publication date: 29 October 2018

Issue publication date: 2 May 2019

188

Abstract

Purpose

The purpose of this paper is under the analysis framework of the system theory, analyzing the optimal contract mode of agricultural supply chain to guarantee the stability of agricultural supply chain and the equilibrium of agricultural product market, to analyze the effect of farmers’ risk attitude on the selection of contract modes and to find the way to encourage farmers’ productive effort and to avoid farmers’ hitchhiking behavior, to guarantee the stability of agricultural supply chain.

Design/methodology/approach

Under the guidance of the system theory, using the Stackelberg model and the nonlinear programming theory, this paper comparatively analyzes farmers’ effort (productive effort and sales effort), farmers’ income and the stability of agricultural supply system of four types of contract modes between farmers, third-party organizations and market.

Findings

First, in the agricultural market, market-type contract cannot maximize farmers’ income. The main reason is that farmers do not have enough ability to avoid market risk and to bargain. Second, for farmers of risk seeking, choosing a market-type contract and secondary-income contract can increase their income. Third, under the fixed-purchase price contract, the hitchhiking behavior would happen. Fourth, when farmers’ productive efforts are the same, farmers’ income under the secondary-income contract is higher than under the fixed-purchase price contract. Because under the secondary-income contract, farmers have the opportunity to obtain the secondary distribution of benefits, farmers’ hitchhiking behavior could be avoided.

Originality/value

Analyzing the contract modes between farmers and the third-party organization in the agricultural market could reduce the influence of price fluctuation, avoid the uncertainty of the relationship between the supply and demand, stimulate the productive effort of farmers and provide theoretical guidance for establishing efficient and stable agricultural supply system.

Keywords

Acknowledgements

This study was supported by the From Peasant farmers under the age security and the Agricultural Land: interactive mechanism, Effects and Policy Innovation of China (project numbers 71203157) and the national Natural Science Foundation of China: Research on the evaluation and compensation of harmonious and rational public cultural service facilities project (project numbers 71272148). The authors thank anonymous reviewers and editors for very helpful comments and suggestions of the manuscript.

Citation

Sun, L. and Li, X. (2019), "Comparison analysis on the bilateral efforts of farmers and the third-party organization under multiple contract modes", Kybernetes, Vol. 48 No. 5, pp. 818-834. https://doi.org/10.1108/K-03-2018-0102

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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