Impact of farmers’ shareholding on smart agricultural construction investments under two different participation structures

Purpose To promote investment in smart agriculture, governments often adopt concession-based public–private partnerships (PPPs) to attract agribusiness participation. While this approach can accelerate development, it may also marginalize farmers and raise concerns about social equity. This study aims to explore the mechanism by which farmers’ shareholding affects various stakeholders. Specifically, the interaction between the decisions of stakeholders due to shareholding is demonstrated. Additionally, suggestions for optimizing policies and projects are provided. Design/methodology/approach First, based on agricultural practice, this study developed a Stackelberg game model between a farmer and an agribusiness under a farmer shareholding scenario. To test the robustness of the results, two distinct participation structures have been considered: one involving a single farmer and the other involving two heterogeneous farmers. Finally, this study conducted a comparative analysis of the game’s equilibrium outcomes under both structures to explore the underlying decision-making mechanisms. Findings The findings reveal three key insights. First, under both participation structures, farmer shareholding increases the profit of the participating farmer but decreases the profits of the agribusiness and the supply chain. Second, in the case of two heterogeneous farmers, shareholding increases the profit of the participating farmer while reducing the profit of the farmer engaged solely in production, thereby widening the income gap between farmers. Finally, greater yield uncertainty can partially mitigate the agribusiness’s profit losses caused by farmer shareholding. Research limitations/implications The uncertainty in agricultural commodity markets and the risk preferences of the farmer and the agribusiness are not considered. Practical implications This study provides insights for governments in designing equity policies and balancing the interests of agribusinesses and farmers. To support poverty reduction and sustainable agricultural development, governments should consider establishing cooperatives that include all local farmers and promote collective ownership. When agricultural yield uncertainty is high, farmers can be encouraged to invest in smart agriculture. Originality/value This study reveals how farmer shareholding affects stakeholder decision-making and profits in smart agricultural PPP projects and provides a theoretical foundation for understanding how production uncertainty influences agribusiness decision-making.