Farmers' Participation In Contract Farming And Study On Its Impact On The Supply Of Formal Finance

Rural household is the basic unit of production activities, the level of productivity development of which directly determines the economic development in rural. As the concentration of agricultural production, farmers are increasingly in demand for funds during the process of production; only relying on the farmers'accumulation is often difficult to meet their need for agricultural production. If we can not solve the problem of the financial needs of farmers, households'initiative and income will be hurt, thereby affecting the economic development level of rural areas in China.Contract farming is the main mode of operation used in China's agricultural industry, which recent years has achieved rapid development, and has played an important role in improving productivity and promoting rural economic development. At present, many scholars at home and abroad conducted in-depth research to contract farming and related areas, achieving remarkable results in many areas such as revealing the law of contract farming development and how to improve the Compliance rate. However, there is not an article to study on solving problem of farmers'need for fund and improving the supply of rural financial though the development of contract farming from the households'point of view. Based on this, this paper make reference to results of at home and abroad, construct the framework to analyze how farmers'participation in contract farming act to farmers'financial borrowing capacity, and then apply the data collecting from some rural areas in Zhejiang. Then we make a conclusion: farmers'participation in contract farming will effectively improve their financial borrowing capacity and increase the informal financial supply in rural areas. This paper is divided into five parts:The first chapter summarizes and evaluates the contract farming related results at home and abroad, and induces the innovation and weaknesses of this paper.The second chapter introduces the concept of contract farming and its history and so on. This part mainly analyzes the risk and benefits of contract farming, the factors of farmers'participation in contract farming and the factors of the default of the contract.ChapterⅢanalyze the concept of formal financial, characteristics of household demand for funds, and the way of farmers making formal loans. This part focuses on analysis of constraints of financial needs and supply, at the end of which an idea to solve the problem of farmers'formal credit is proposed.ChapterⅣbased on earlier theoretical analysis, put forward the structural equation model of the effects of farmers'participation in contract farming to the formal financial supply. The conclusions are: income has a positive impact on farmers'participation in contract farming; farmers'participation in contract farming has a positive effect on the credit capacity; the risk has a positive impact on farmers'income, and has a negative impact on farmers'credit capacity.The last chapter based on the earlier theoretical and empirical analysis, raise the policy recommendations on how to improve farmers credit capacity in order to increase their income through contract farming for government departments.Innovations of this paper is that, taking full account of the factor of funds when resolve the factors of farmers'participation in contract-farming, and then go deeply to how farmers'participation in contract farming influence their formal financial credit capacity.