Benefits of market information and professional advice in a vertical agricultural supply chain: the role of government provision

Abstract

We study a vertical agricultural supply chain with a farmer cooperative who decides his agricultural product selling price and a social enterprise who makes her order quantity decision and resells products to the end market. The effect of market information and agricultural advice provided by the government on the system's outcomes is investigated. A two-stage game model is proposed to characterise this vertical relationship. The equilibrium decisions of the two players under different government supporting cases are derived. We contrast the system outcomes under different cases and conduct comparative analysis. It is found that (1) the farmer cooperative's profit increases if the government provides market information to him and the social enterprise at the same time; (2) the agricultural advice provided by the government can increase the benefits to each participant in the supply chain; (3) to maximise the total supply chain profit as well as its sustainability, the government may choose to provide market information to the social enterprise only; (4) when the wholesale price is intervened by the government or exogenously provided, the social enterprise's social responsibility concern can increase both the farmer cooperative's profit and the social enterprise's social payoff.

Keywords:

• Vertical agricultural supply chain
• market information
• agricultural advice
• information transparency
• social responsibility concern

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 https://betterworld.coop/sectors/sector-ag/

2 Agricultural cooperatives: paving the way for food security and rural development. Food and Agriculture Organization of the United Nations.

3 Detailed Information on Roles of Agriculture in the Economic Development of a Country: http://www.economicsdiscussion.net/economic-development/role-of-agriculture-in-the-economic-development-of-a-country/4652

4 Sometimes the market information and agricultural advice could also be provided by NGOs.

5 The representative government can also be an NGO who supports the farmer cooperative in market information and agricultural advice.

6 Economic Research Institute for ASEAN and East Asia (ERIA): ‘R&D and Performance of the Thai Agriculture and Food Processing Industry: The Role of Government, Agribusiness Firms, and Farmers’.

7 https://www.dedellseeds.com/resource/9-ways-improve-corn-crop-yields/

8 The mathematical details are available to the readers by request.

Additional information

Funding

The work described in this article was supported by National Natural Science Foundation of China (NSFC) [grant number 71771154], [grant number 91846301], [grant number 71601077], [grant number 71971080], [grant number 71801155], Guangdong Basic and Applied Basic Research Foundation [grant number 2020A1515011272], Natural Science Foundation of Guangdong Province [grant number 2018A030313938], Natural Science Foundation of Hunan Province [grant number 2020JJ4252].

Notes on contributors

Mingzhu Yu

Mingzhu Yu is currently an Associate Professor in the Institute of Big Data Intelligent Management and Decision, College of Management in Shenzhen University. She received her Ph.D. degree from the Department of Industrial Engineering and Logistics Management in Hong Kong University of Science and Technology in 2012. Her research interests include supply chain management and transportation management. Her works have been published in IIE Transactions, Naval Research Logistics, European Journal of Operational Research, Transportation Research Part B, etc.

Yan Chen

Yan Chen an Associate Professor in Big data and Internet Innovation Research Institute of Hunan University of Technology and Business and a postdoctoral fellow of Central South University. She holds a Ph.D. in Management Science and Engineering from Hunan University. Her research focuses on operation management, information economics, big data analysis and intelligent decision-making. Her works have been published in Journal of Management Science and Engineering Transportation Research Part E, etc.

Zelong Yi

Zelong Yi is an Associate Professor in the Department of Transportation Economics and Logistics Management in the College of Economics at Shenzhen University. He holds a Ph.D. in Operations Management from Hong Kong University of Science and Technology. His research focuses on supply chain management, consumer behaviour, and information economics. His works have been published in Manufacturing and Service Operations Management, Production and Operations Management, Decision Sciences, OMEGA, etc.

Qi Wang

Qi Wang is a postgraduate student in the College of Civil and Transportation Engineering, Shenzhen University. Her major is management science and her research direction is agricultural supply chain management.

Zizhen Zhang

Zizhen Zhang is currently an Associate Professor in the School of Computer Science and Engineering, Sun Yat-sen University, China. His research interests include computational intelligence and its applications in production, transportation and logistics. He received B.S. and M.S. degree in the Department of Computer Science from Sun Yat-sen University, China, in 2007 and 2009, respectively. He received a Ph. D degree from City University of Hong Kong (2014).