Effectiveness of Government Subsidy Policies in Green Contract Farming Supply Chain with Altruistic Preference

An indispensable driving force behind parties entering into green contract farming agreements is government subsidy. This paper considers a green contract farming supply chain (GCFSC) consisting of a company and a farmer, and compares the effectiveness of two green subsidy policies on the GCFSC. We find that both green subsidy policy are an effective way to improve the economic, environmental, and social benefits of the GCFSC. However, the performance of these two subsidy policies varies depending on the government’s total subsidy expenditure. In general, the green production quantity subsidy policy is more beneficial to farmers and consumers, while the green investment cost subsidy policy is more beneficial to companies and the environment. Notably, when the subsidy coefficient is high, subsidizing the company based on green investment costs can maximize returns in terms of environmental benefits and total social welfare. Furthermore, we examined the impact of a company’s altruistic preference on GCFSC decision-making and benefits under the green investment cost subsidies. The results show that although the company’s altruistic preference contributes to the overall social welfare of the GCFSC, it reduces the company’s profits. Moreover, the company’s profit losses increase as the company’s altruistic preference or the government’s subsidy coefficient increases. Our findings provide insights for policymakers to optimize green subsidy policies, and for GCFSC members to enhance decision-making and cooperation mechanisms, thereby improving the economic and environmental performance of GCFSCs.