Author(s)

Yicen Liu ¹, Gengjun Gao ¹

Affiliation(s)

¹ Institute of Logistics Science and Engineering, Shanghai Maritime University, Shanghai, 201306, China

Corresponding Author

Gengjun Gao

ABSTRACT

The enthusiasm of farmers in production has been restricting the development of China's agricultural economy. In order to guide the sustainable development of agricultural economy, the government has adopted various strategies of subsidizing farmers, among which the representative strategies include subsidizing the loan interest of farmers and purchasing agricultural insurance for farmers. Based on the strategy of the government providing loan interest and premium subsidy for farmers, this paper establishes the order financing model in the agricultural supply chain composed of farmers, core agricultural enterprises and the government, and explores the relatively optimal subsidy strategy of the government under different subsidy funds. It is found that in the strategy of subsidizing interest and premium, when the government subsidy funds can only meet one subsidy, and the discount rate is high, the difference between the high and the insurance output rate is small, and the primary subsidy interest is more conducive to improving the production enthusiasm of farmers; otherwise, the primary subsidy premium is more conducive to improving the production enthusiasm of farmers. In addition, in the strategy of simultaneously subsidizing interest and premium, when the probability of disaster event is large, the government should use all the limited funds for the purchase of agricultural insurance; otherwise, the government should use all the limited funds for the discount of bank loans.

KEYWORDS

Agricultural supply chain; order financing; random output; government subsidy; government discount interest

CITE THIS PAPER

Yicen Liu, Gengjun Gao, Government subsidy strategy in the order financing of agricultural supply chain under random output. Agricultural & Forestry Economics and Management (2024) Vol. 7: 131-143. DOI: http://dx.doi.org/10.23977/agrfem.2024.070119.

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