Optimization of the Green Agricultural Supply Chain Under Governmental Intervention Policies

Abstract

With economic development, green agricultural products have gained increasing attention in society. Consumers have a preference for green agricultural products and are willing to pay a premium for them. However, this premium comes with uncertainty and can affect the production of green agricultural products. This paper proposes an information provision program where the government predicts premium information and shares it with farmers, comparing it with the traditional production subsidy program. To do so, this paper constructs a supply chain model where some farmers choose the direct sales channel while others opt for the contract farming channel. Nash and Stackelberg games are used to analyze farmers' production decisions. The study finds that (1) The production subsidy program can effectively promote the production of green agricultural products, but excessive subsidies can reduce farmers' income. (2) The information provision program does not directly affect the production of green agricultural products but can promote farmers' income. Moreover, the more accurate the forecast information and the greater the premium volatility, the more significant the increase in farmers' income. (3) When the production cost of green agricultural products is low or the unit area yield is high, the information provision program can better help farmers achieve higher income. However, when the production cost of green agricultural products is high or the unit area yield is low, the production subsidy program is more effective.