Research On The Government Subsidy Mechanism And Its Application Based On The Contract Farming Supply Chain Considering Farmers' Risk Preference

Agricultural subsidy is an important policy for the issues concerning agriculture,countryside and farmers.It's also meaningful to develop agricultural modernization and to ensure the strategy safety of China.The production reality is ignored,such as the natural disasters and other objective constraints.However,with the various production environment,random yield uncertainty and farmers' different risk preference and capacity constraint,simple and standard subsidy policy cannot motivate the famers effectively and develop the agricultural industry.In this paper,a three-level supply chain system consisting of the government,a risk-neutral company and multiple risk-averse farmers based on the traditional contract farming scheme is constructed.Two different models,which are subsidy to farmers model and subsidy to the company model,are analyzed and compared considering the yield uncertainty,farmers' capacity and risk preference,as well as the government's capital constraint.The supply chain performance and government's optimal subsidy model and subsidy coefficient are discussed.Then we take the cassava-based bioethanol as an example to verify and further analyze the constructed model.It is found that subsidy can effectively encourage farmers with different risk preferences to expand their input quantity and increase social supply of agricultural products without capacity constraints.When there is no capital constraint to the government,the supply chain performance will change with the range of farmers' capacity.While the subsidy to the company model is a better choice to the government.When famers are risk-averse and the governments subsidy funds are restrained,subsidy to farmers can better motivate farmers to input more and lead a better subsidy efficiency.In this case,the constraints of farmers' capacity and government funds will also affect the level of production and supply chain performance under different subsidy modes,as well as the government's optimal subsidy mode and subsidy coefficient selection.From the perspective of maximizing the agricultural product supply level and the social welfare,the subsidy mode to farmers will be a better choice for the government under limited subsidy funds.But if the subsidy funds are beyond a certain level,subsidy to the company can better improve the farmers' input quantity and supply chain performance.Besides,it can be seen that farmers do not need subsidy under a lower capacity level.Because they will input as much as they can to ensure their income.And the capacity becomes the bottleneck of agricultural industry.Appropriate scale operation of farmers will help to promote the development of agricultural and exert the advantages of financial subsidy policy.