Optimizing Agricultural Supply Chain Subsidy Strategies Incorporating Farm Size and Budgetary Constraints

This study models a three-level supply chain (farmer–retailer–government) incorporating farmer risk aversion. Under land capacity and fiscal budget constraints, it analyzes two subsidy strategies: area-based subsidies to farmers (SF) and volume-based subsidies to retailers (SR). Key findings include that when farmer land capacity exceeds a critical threshold and the fiscal budget is constrained, SF yields superior performance to SR. Conversely, with sufficient budgets, SR outperforms SF under high land capacity. Under moderate land capacity and unlimited budgets, both strategies exhibit equivalent effects. When land capacity falls below a critical threshold, government subsidies become unnecessary. The SF strategy demonstrates greater resilience against output uncertainty compared to SR. Under constrained budgets, SF is preferable; SR becomes more advantageous with abundant budgets. Critically, increasing risk aversion significantly reduces social welfare under both SF and SR strategies. This indicates neither subsidy mechanism effectively mitigates the adverse effects of farmer risk aversion.