Exploring Cooperative Mechanisms in the Chinese Agricultural Value Chain: A Game Model Analysis Based on Leading Enterprises and Small Farmers

Abstract

In the context of agricultural modernization in China, this paper examines the micro-level perspective of agricultural value chains. Drawing from three primary models of agricultural value chain cooperation—namely, “leading enterprises + small farmers”, “leading enterprises + cooperatives + small farmers”, and “corporate integration”—it establishes four game models: the decentralized decision-making game model, the two revenue-sharing game models, and the centralized decision-making game model. It systematically analyzes the cooperation mechanisms between leading enterprises and small farmers in upstream production links of the agricultural value chain, aiming to improve the cooperation strategy between leading enterprises and small farmers, elevate the status of small farmers in the agricultural value chain, promote increased income for farmers, and strengthen the agricultural value chain. The research findings are as follows: Firstly, the traditional contract of “leading enterprise + smallholder farmers” is incomplete, which makes it difficult to avoid opportunism and moral hazard that may arise between the two parties. By comparing multiple parameter values, it is found that this model is at a lower level of agricultural value chain development. Secondly, the model of “leading enterprise + cooperative + smallholder farmers” improves the tightness and stability of cooperation between leading enterprises and smallholder farmers. This model explains to some extent the operability of smallholder farmers sharing the value of the agricultural value chain. Compared with various parameter values, this model is at a medium level between other models. Finally, the “corporate integration” model is a fully vertical integration model. Compared with various parameter values, this model is at an advanced stage of agricultural value chain development. Therefore, agricultural value chains will ultimately develop toward the direction of corporate integration. This study has positive practical significance for enhancing the status and claim rights of small farmers, promoting increased income for farmers, enhancing the consistency of values between leading enterprises and small farmers, strengthening the stability of the agricultural value chain, and ultimately achieving common prosperity and agricultural modernization in China.