An Analysis of Price vs. Revenue Protection: Government Subsidies in the Agriculture Industry

Alizamir, Saed; Iravani, Foad; Mamani, Hamed

doi:10.1287/mnsc.2017.2927

Cited by 192 publications

(107 citation statements)

References 46 publications

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“…The purchasing price of contract farming declined with the increase of government subsidy interest rate, which means that farmers are willing to accept low purchase prices to achieve the cultivation of agricultural products under the stimulation of high subsidy. Our results are similar to literature [15] in which increased government subsidies can promote a reduction in agricultural purchase prices. Interestingly, even if the purchase price is low, farmers may choose to expand production scale under the influence of high subsidy rates; thus, the company can purchase more biomass feedstock at a lower price, and the income increases.…”

Section: The Models and Decisions A The Objective Of Farmers Andsupporting

confidence: 91%

“…The greater the planting cost coefficient, the lower the planting efficiency. The quadratic input cost functions that capture the increasing marginal cost of input have been used in agricultural models [15], [18], [28]. Agricultural production is very susceptible to weather [40]- [42].…”

Section: Problem Descriptionmentioning

confidence: 99%

“…Under a social welfare programme (SWP), the government's purpose is to maximize social welfare. U.S. develops various agricultural subsidy programs to improve social welfare [15]. Government subsidies have been proven to help farmers obtain credit loans and boost farmers' production scale [16].…”

Section: Introductionmentioning

confidence: 99%

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Optimization of the Biofuel Supply Chain With Capital-Constrained Farmers Under Government Subsidies

Xie

Cai

et al. 2020

IEEE Access

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China's biofuel industry faces the problem of insufficient supply of biomass feedstock because farmers lack the funds to carry out their planting plans. Moreover, natural disasters can easily expose farmers to bankruptcy risks, making it difficult for farmers with limited capital to obtain financing from banks. This paper studies the government's subsidy programmes for helping farmers obtain financing: a poverty alleviation programme (PAP) and a social welfare programme (SWP). We construct a biofuel supply chain model including the government, the bank, farmers, and companies, which optimizes the biomass feedstock production and the government subsidy in different subsidy programmes. We find that high planting efficiency leads to a lower subsidy interest rate for farmers in PAP, while in SWP, high planting efficiency can promote the government to set higher subsidy interest rate when the competitive intensity between bioenergy companies is weak. Furthermore, the total biomass feedstock planting area and the optimal subsidy interest rate in SWP are larger (smaller) than those under PAP when the planting efficiency is higher (lower) than a certain threshold. An extension of our model shows that the government's subsidy policy for the farmer with financial constraints will reduce the benefits of the farmer who does not need to borrow from the bank. The government's failure to implement subsidy programmes can sometimes lead to a higher total income for farmers. INDEX TERMS Supply chain finance, biofuel supply chain, yield uncertainty, government subsidy.

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Section: The Models and Decisions A The Objective Of Farmers Andsupporting

confidence: 91%

Section: Problem Descriptionmentioning

confidence: 99%

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Optimization of the Biofuel Supply Chain With Capital-Constrained Farmers Under Government Subsidies

Xie

Cai

et al. 2020

IEEE Access

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“…Our work contributes to the growing literature on managing socially responsible and humanitarian operations (Alizamir et al 2019, Mu et al 2016, Natarajan and Swaminathan 2014, Privett and Erhun 2011. Within this stream, the existing papers have studied a variety of issues but the ones that are most relevant to our work are resource allocation and incentive design.…”

Section: Literature Reviewmentioning

confidence: 99%

Value of Combining Patient and Provider Incentives in Humanitarian Health Care Service Programs

Mehrotra

Natarajan

2020

Production and Operations Management

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The below‐par progress toward the Millennium Development Goals in many developing countries has been attributed to the low availability of good quality health care services and to the demand‐side barriers to access. In this study, we analyze an incentive design problem faced by a budget‐constrained humanitarian organization managing a health care service program (e.g., maternal health or HIV services) with different emphasis on the two measures of quality—structural and process. Incentives offered to the health care provider (referred to as supply‐side incentives) are aimed at improving the availability of good quality services and demand‐side incentives are used to encourage patients to seek care. In many developing country health programs, incentive schemes tend to be purely supply‐side focused or purely demand‐side focused. However, our results suggest that by offering the right combination of incentives to the patients and the provider, program performance can be increased up to 20 times, on average, depending on the service offered. Even within the current practice of using one‐sided incentives, there is significant scope for improvement (as much as 14 times, on average) by ensuring that there is better alignment between the incentive scheme and the service offered. In particular, pure supply‐side incentive schemes perform better than pure demand‐side incentive schemes in programs where there is a higher emphasis on structural quality. The opposite result holds true for programs that place a higher emphasis on process quality.

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“…Other papers investigate the role of subsidies in increasing the availability of malaria drugs (Taylor andXiao 2014, Kazaz et al 2016), ensuring efficient distribution of surface water among farms with different proximity to water sources (Dawande et al 2013) as well as the impact of private and public market information provision (Chen and Tang 2015) and agricultural advice and market forecast provision (Chen and Tang 2015) on farmers' welfare. Additionally, Alizamir et al (2015) study two types of farm subsidies (Price Loss Coverage and Agriculture Risk Coverage) practiced widely in the U.S. in order to support farmers' incomes and investigate their impact on farmers, consumers, and the government. Furthermore, our paper complements the operations management literature that studies consumer subsidies as a means of promoting new technology such as solar panels and electric vehicles.…”

Section: Related Literaturementioning

confidence: 99%

Government Interventions in Promoting Sustainable Practices in Agriculture

Akkaya

Bimpikis²,

Lee³

2017

SSRN Journal

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An Analysis of Price vs. Revenue Protection: Government Subsidies in the Agriculture Industry

Cited by 192 publications

References 46 publications

Optimization of the Biofuel Supply Chain With Capital-Constrained Farmers Under Government Subsidies

Optimization of the Biofuel Supply Chain With Capital-Constrained Farmers Under Government Subsidies

Value of Combining Patient and Provider Incentives in Humanitarian Health Care Service Programs

Government Interventions in Promoting Sustainable Practices in Agriculture

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