Vertical Coordination In Agri-Food Supply Chains And Quality Of Raw Milk

With the implementation of the reform and opening up to the outside world, especially over the past 10 years, the annual increase level of turnover of china's dairy companies is up to 20%.This level is very high compared with the fact that the annual increase level of turnover of world's dairy companies is 1.5%. In fact, there is severe unrevealed crisis behind the unconventional development of china's dairy companies. The key to the healthy development of dairy companies is the quality of raw milk,especially the safety of raw milk. But, to china's dairy companies, control of the safety of raw milk have been weak. The lack of control not only results the low quantity and low quality of raw milk directly, but also indulges the adulteration of raw milk indirectly. Until Melamine Incident in 2008, the crisis was revealed. To enhance the control is being of important realistic significance for pulling china's dairy companies out of crisis, improving the competitiveness of china's agriculture industry, deepening the development of socialist market economy.To enhance the control of raw milk is related with the relationship between dairy farmer and dairy company. So it is reasonable to study how to enhance the control of raw milk based on the theory of industrial organization. According to the theory of industrial organization, relationship coordination between dairy farmer and dairy company is a kind of concept of vertical coordination in supply chains.Stared from this view, this paper is aimed at studying the relationship between vertical coordination in supply chains and quality of raw milk, employing model deductive method, comparative analysis. To be specific, this paper focus on the case of china. The main content is to analyse the influence of vertical coordination etc. market trade, intermediate state, integrity over the quality of raw milk, the dynamic relationship between vertical coordination in supply chains and quality of raw milk and quality of raw milk under the influence of china's four organizational models. The main conclusions are as follows.Firstly, compared market trade with integrity, the control of market trade is weaker than that of integrity while the control of integrity is stronger than that of market trade. Through market, the trade between diary farmer and diary company is a kind of one-time deal. Then, the low quality of raw milk is prevalent. Through integrity, the trade between diary farmer and diary company is the trade between different sectors of a company. Then, the production of raw milk can be supervised.Secondly, while the level of close connection between diary farmer and diary company is higher, the quality of raw milk is higher.The model of evolutionary game show that when the level of close connection is very high, through continuous learning and imitation, diary companies are "cooperative", that is, higher prices for higher quality. And diary farmers are "cooperative", that is, higher quality for higher prices. And the model of evolutionary game also show that when the level of close connection is very low, through continuous learning and imitation, diary companies are "uncooperative", that is, low prices for both high quality and low quality.And diary farmers are "uncooperative", that is, low quality for low prices.Thirdly, on the control of quality of raw milk, the cooperative model is better than contract model, while contract model is better than market trade model.As for allocation of resources, intermediate state relies on a series of contracts. And the quality of raw milk relies on the implementation of the contract. So the stability of contract is very important for the quality of raw milk. With the analysis of ChapterⅢ, we found that the stability of the contract model is lower than the cooperative model contract. So the quality of raw milk under the contract model is lower than that under the cooperative model. But on the control of quality of raw milk, the contract model is better than market trade model for the counterparter who affords low quality of raw milk have the threat of punishment under contract model.Last but not the least, government intervention is necessary for enhancing the level of close connection between diary farmer and diary company in china. Through comparative analysis, among china's four organizational models, "diary company+cooperative+diary farmer" and "diary company+diary company owned pasture " is comparatively efficient to control the quality of raw milk. According to the paper, the smoothly operation of the two organizational models need favorable governmental policies.