"Company + Peasant Household" Model Order Agriculture System Evolution And Coordination Mechanism

The rise and development of agricultural industrialization provides a new train of thought to solve the so called three dimensional rural issues in China during the1990s. It has been widely recognized by the government and academic community. The "Company&peasant household" mode of contract farming is a generally pursued model in the process of agricultural industrialization in our country. It signs various reciprocal contracts between companies and farmers to replace the temporary market dealing. It can alleviate the contradictions of "small farmers" and "big market". It has made important contribution to promote the farmers’ income and raise farmers’ living standard. However, in the practice of agriculture industrialization, the cooperative relationship between companies and farmers is extremely unstable. The breaching of contract phenomenon between farmers and companies is serious. Facing the plight of the farmers’ interest losses, companies’ operating risk increases, economies of scale forms difficultly.Does the "company&peasant household" mode of contract farming have its inherent rationality? If it is reasonable, then what kind of benefit coupling mechanism should be established between corporation and farmers in order to make the cooperation more closely and stable? This is the two major problems to be studied in this paper. Although there are many relevant research achievements, most of the existing researches have explained the rationality of contract farming from the appearance by using the transaction cost and institutional economics theory. And they always study the behavior of the company and farmers separately, and then propose solutions. This may make the system optimization direction lack of necessary supporting mechanism because of the knowledge deficiency of evolution mechanism of the study system. In addition, the market price of agricultural products fluctuates frequently because of the unique characteristics of agricultural products, such as perishable, production cycle, affected by the climate etc. This leads to the high risk of contract farming. The existing researches usually start from a steady state, and then construct static model of the system. So they don’t take rule adjustment generated by the changes of the environment into consideration. Therefore, this paper studies the rationality of "company&peasant household" mode of contract farming and system optimization directions from the view of Self-organization and Synergetics. Then it puts forward countermeasures of solving the breaching of contract. On the basis of this, it analyzes the dynamic behavior characteristics of the system and feedback relationships between the elements by starting from the structure of "company&peasant household" system. It establishes the corresponding SD model and simulates the model. This article inspects the system performance with emphasis on the affects of the market price. It puts forward the coordination and optimization scheme of the "company&farmer" system to aim at improving both the company and farmer’s income and resolving system risk. The purpose is to propose the reasonable and effective countermeasures which can promote the formation of truly "benefit-sharing and risk-sharing" cooperative mechanism between company and farmer, enhance the system stability, and improve the system performance.The main research works and conclusions of the paper are as follows:(1)It constructs the cooperative and competitive evolution Logistic model of "company&farmer" system, then analyses the stability of the model and proves that a new system-"company&farmer" system is created through interaction and coupling to each other between the company and farmers, which produces whole emergences represented by the stable state.(2)It simulates the system evolutionary process on a variety of scenarios when the cooperative and competitive parameters of the system are altered. The results show that the evolution directions of the "company&farmer" system have close relationship with the cooperative and competitive coefficients and the initial size of the company and farmer.When the positive effects generated by the cooperation between corporation and farmer outweighs the negative effects produced by competition, both the company’s and farmer’s scale exceed the maximum scale which can reach only relying on themselves. This proves theoretically that the "company&peasant household" mode of contract farming has its inherent rationality.But the operating efficiency of the system is low and the ultimate scales of the corporation and peasant household are less than their initial scales when the negative effects come from competition is strong. It’s useful to amplify the cooperation effect in the system, make the beneficial operation mode the leading role, thus guide the system to the correct direction of evolution.(3)It analyzes the typical interest coupling mechanisms between company and farmer. It point that we can use the agri-products currency options market to dissolve market risk. Then it puts forward a innovation mode----"contract farming&options".(4) It analyzes the dynamic feedback relation and causal relation of "company&farmer" system and constructs the SD model of the system under "free trade" mode. It simulates the model with taking grape industrialization of Binchuan Yunnan province as an example. The results show both the company and the farmer need to bear the market uncertainty risk under the "free" mode. Not only the interest of farmer can’t be guaranteed, the economic benefits of the company are also affected.It uses protective price pattern in order to protect the interests of farmers. The simulation results show that the protective price mechanism can protect the interests of farmers effectively. It can improve the income of farmer and stimulate the steady progress of agriculture production. But the risks from fluctuation of market price are not reduced after executing protective price mechanism. The company bears all the market risks under the price protective mechanism.In order to dissolve market risks, the company purchases options in the agri-product currency options market after signing with farmers. It constructs a "protective price+options" SD model and simulates it. From the results it can be seen that the company can dissolve market risk of price fluctuation to a certain extent through the purchase of options and achieve stable profit. The company can avoid market risks and obtain relatively stable income when the fall range of market price is bigger. But the profit of the company is decreasing compared with the case of not buying options when the fall range of market price is small. Therefore, the government can allowance the agriculture-related companies for the purchase of options by using certain proportion of agricultural subsidies funds. It can improve the performance of the "company&farmer" system effectively and reduce the default behavior of the company, then promote the stable operation of the system. It constructs a SD model of the "protective price+option+production cooperation+caution money" mode in order to further enhance the performance of "company&farmer" system. The simulation results show that this cooperation mode can promote the increase of both the company and farmer’s profit. It can achieve perfect harmony of the system. Furthermore, the simulation results also show that caution money can be used as a tool for regulating the distribution of profits between company and farmer. And the support strength of the company should be controlled within a certain range.The paper is innovative in the following aspects:(1)It considers the company and the farmer as two species in the ecological system which is mutually dependent and competitive due to limited resources. It constructs cooperative competition evolution model of company and farmer system by using Logistic equation. The model takes company size and farmer size for the order parameter. It analyzes the stability of the model. It researches on system coordination competition evolutionary laws and reveals the system evolution mechanism through model simulation.(2)It applies system dynamics theory and method to study the cooperation coordination mechanism of the company and farmer. This breaks the previous research which mainly based on transaction cost theory, incomplete contract theory and game theory. It considers "company&farmer" contract farming as a whole and establishes the corresponding SD model from the observation of system structure. It can not only analyzes the dynamic behavior of system quantitatively through system simulation, but also can change the policy parameters, set up different scenes, and observe the system responses to the relevant policy, then obtains the satisfactory results.(3)It establishes three level variables (the company’s profit, farmer’s profits and farmer production) and three differential equations of the "company&farmer" system and realizes mathematical description of the system. Then it runs the model by practical simulation. It proposes optimization solutions to improve system performance according to the simulation results. It establishes the system dynamics model of each scheme and compares the profit of company and farmer under different scheme when market prices fluctuate frequently. Finally it puts forward coordination and optimization schemes of "company&farmer" system in order to improve the company and farmer profit as the goal.