Study On Governance Of Transaction Intermediary In Contract Farming

The model of "company + intermediaries + fanners" is to effectively resolve the opportunism of the farmers in our contract farming arising from the small scale of production, decentralized of living. In this contract farming model, how to effectively manage the intermediaries to prevent the possible opportunism is crucial. Taking a typical and successful case for the background, This paper bring forward four basic propositions for the effective incentive and governance of the transaction intermediary through the analyses and interpreting of governance mechanism for the transaction intermediaries. And then made some theoretical comparison and extended discussion. The viewpoint of this paper are :(l)whether the company can gain rent in the market or not determine whether the transaction intermediary have incentive to take part in the contract farming or not; (2) If the functions division between an transaction intermediary and the company meet the condition: who have the functional capability advantage should have the control right of the corresponding functions, the contract farming will more stable; (3) Bringing the transaction intermediaries sufficient cooperation residual and reducing its non-Controllable risk can bring incentive to farmers to make more efforts to control farmers; (4) the incentive effect for transaction intermediary and impartibility of their work is the two important reason for the transaction intermediary not been internalized ;(5) Monitoring, quality traceability and the corresponding punishment are the important governance mechanism to incent an transaction intermediary making more effort to control the quality of the products. In contract farming, effective governance on the transaction intermediary relies on an integrated mechanism. Different mechanisms are interrelated and complemented. All these mechanisms make the companies and transaction intermediary meet a reasonably property arrangement and reducing the possible opportunism of transaction intermediary, and leading the enterprises achieve their governance goals: stable supply and qualified product.This is a single case study. From the research questions to investigation and then to bring forward the proposition, and theoretical comparison and extended discussion, the paper will comply with the relevant case study methods and steps.