Jianhui LIU，Yingliang ZHANG，Taiyan YANG

College of Economics and Management，Southwest University，Chongqing 400715，China

1 Introduction

The precondition for agricultural development is the reasonable agricultural industrial chain.Reasonable agricultural industrial chain is favorable for promoting rural economic development，increasing added value of agricultural products，and raising competitive power of agricultural products.As to specific connotations，the agricultural industrial chain is a network structure closely related to agricultural primary products and the supply and demand of industrial clusters，including early stage industrial sectors（scientific research for agricultural production，and means of agricultural production），medium stage industrial sectors（crop planting，livestock and poultry breeding），and later stage industrial sectors（processing，transportation，storage，and sales with agricultural products as raw materials）.Large scale of studies abroad show that promoting growth of agricultural industrial chain is an important path for agricultural development，but the integration of agricultural industrial chain is not simply the combination of industrial sectors，but a complex systematic project.In China，compared with large scale of manufacturing industry and modern production model，there are still problems with the development of agriculture，such as small agricultural production scale，low material capital of farmers，and weak human capital.As a result，China's agricultural industrial chain does not have scale condition necessary for industrial integration.Large scale is an important channel for connecting small peasant economy of family operation with modern market economy，and planting traditional small peasant economy to modern agricultural production.Thus，promoting large scale is an inevitable path for integration of agricultural industrial chain.On the basis of combing related literature of agricultural industrial chain，and setting foot on current situation of integration of agricultural industrial chain，we analyzed difficulties in the development of China's agricultural industrial chain，and came up with recommendations for promoting growth of industrial chain through large scale operation，so as to promote the development of modern agriculture.

2 Overview of domestic and studies abroad

2.1 Related foreign researchesForeign scholars carried out researches of the growth of agricultural industrial chain from the perspective of information technology，logistics management，and food safety and quality.

2.1.1 Information technology.Luttighuis（2000）stated that present agricultural information management technology has three technical barriers（excessive specific，stiff，and narrow applicable scope），thus government and agricultural enterprises should properly transform information technology；Hofman（2001）and Dam（2005）stressed the importance of information and communication technology（ICT）in the development of agricultural industrial chain，and stated that these two factors can raise competitive power of agriculture related enterprises and increase market share；Jabir Ali and Sushil Kumar（2011）proved，by empirical analysis method，that information and communication technology can improve farmers' decision making ability，so as to better bring into full play advantages of agricultural supply chain.

2.1.2 Logistics management.Different scholars studied logistics management level of certain product and effective connection of various links from different perspectives.Hobbs（1988）and Lamb（1998）studied vertical cooperation process and logistics in beef industrial chain of the United States；Man（2001）made empirical study on logistics management of global cotton industrial chain consisting of production，processing，trade and consumption；Jayanth Jayaram （2010）and Lars Huemer（2012）stated that strengthening logistics service is a major part of improvement of supply chain management.

2.1.3 Food safety and quality.Jacxsens（2010）studied influences of supply chain of fresh agricultural products due to climate change on food safety with the aid of simulation model and risk evaluation tool；Katleen Baert et al.（2011，2012）studied food chain of Belgium and stated that safety of food chain is influenced by local social，economic，political and environmental situations.Apart from the above influence factors，Peter Newton（2013）studied influence of participants and operating mechanism of agricultural supply chain on sustainable development of industrial chain.

2.2 Related domestic researches

2.2.1 Organization mode.Luo Biliang（1999，2004）held that the economic organization diversity of agricultural industrial chain is jointly determined by market competitiveness，organization system and transaction scale，characteristics of materials，special purpose of assets，controllability of production，regulation structure，and government interference act.Wang Kai et al.（2004）divided organization mode of agricultural industrial chain into corporate mode，cooperative mode，and contractual production mode according to participant entities and operating mechanism of agricultural industrial chain.They divided promotion modes into leading enterprise promotion mode，intermediary promotion mode，specialized market promotion mode，and other modes according to leaders and participants they promote.Tang Bulong（2009）found that there are three modes of industrial chain of poplar：market transaction，cooperation and vertical integration，and analyzed common foundation for these three modes from transaction cost，special purpose of assets，uncertainty，and market structure.Zhang Yan et al.（2011）analyzed organization forms of agricultural industrial chain from internal and external factors，and stated that product characteristics，resource endowment，asset characteristics，and transaction frequency will directly influence agriculture.

2.2.2 Influence factors of extension and expansion.Domestic scholars have made a lot of researches in building and extension of agricultural industrial chain.Most scholars hold that agricultural industrial chain should be extended longitudinally and expanded horizontally，and it is required to increase value of products from all links.Gong Qinlin（2004）stated that building of agricultural industrial chain includes regional connection of industrial chain and inter-regional extension of industrial chain.Wang Yi et al.（2004）came up with recommendations of longitudinal extension and horizontal expansion of industrial chain，and exploring potential of each link，in line with existing short and narrow agricultural industrial chain of China.Chen Hongwei and Guopeng（2009）found that the expansion of China's agricultural industrial chain is restricted by information，market demand，transaction cost，operation and management level，and benefit coordinating mechanism.Gu Yongfen and Wuqian（2011）proved that the growth of agricultural industrial chain can be realized through increasing labor，technology and capital，to increase added value of agricultural products.This is generally called backward extension of agricultural industrial chain.

2.2.3 Influence factors of operation performance.Starting from industrial chain of overall agricultural product or certain agricultural product，most domestic scholars made comprehensive evaluation of operation performance of agricultural industrial chain from objective and subjective performance.They mainly adopt analytic hierarchy process method and fuzzy comprehensive evaluation method，etc.Li Junlong et al.（2006）built performance model for supply chain of agricultural product taking flower enterprises of Jiangsu Province as study object，and verified the assumption using structural equation model.The results show that cooperation ability has significant positive influence on industrial chain，while improvement in market environment has insignificant influence on performance of industrial chain.Zhang Minglin（2006）made an empirical study on overall influence of demand guidance，technological progress，enterprise management efficiency and transaction cost on growth of agricultural industrial chain.Tan Tao et al.（2007）concluded that cooperation ability，cooperation intension and cooperation condition have significant influence on cooperative efficiency of the industrial chain，and cooperation risk indirectly influences cooperation efficiency of the supply chain.Chen Qianjiang（2010）made an empirical study and reached the conclusion that farmers' age，educational level of householders，number of labors in the family，and wage of employee are key factors influencing farmers' enthusiasm for participating in mushroom industrial chain.

3 Analysis on mechanism restricting the grow th of agricultural industrial chain

According to researches of Xiao Xiaohong，the growth of agricultural industrial chain is the result of market demand，capital，technology，talent，industrial development，and policy guidance.As shown in Fig.1，market demand is the start of growth of agricultural industrial chain；leading enterprise is leader and technological innovation subject of agricultural industrial chain；capital，technology and management are important factors of growth of agricultural industrial chain；with development and growth of agricultural industrial chain，the dependence of agricultural industrial chain on resources of agricultural products gradually decreases，while the dependence on technology，capital and management gradually deepens；industrial development provides possibility for market demand，and market and policy guidance promotes growth of industrial chain.

However，the development of modern industries needs perfect market system as well as certain scale.When agricultural development is restricted，agricultural enterprises will be small with low competitive power，low market share，low barriers to entry，consequently limiting the growth of agricultural industrial chain.Besides，under restriction of scale，participating subjects of agricultural development have limited force，low bargaining ability，weak market risk resisting ability，and have no leader function of lead-ing enterprises，and lack ability of integrating industrial chain.

3.1 Barriers to entryBarriers to entry have function of limiting enterers to enter and protecting existing enterprises，while barriers to exit will limit those enterprises which have bad performance and want to transfer out their resources.Under restriction of scale，agricultural enterprises will be small，fund will be limited，and it is difficult to increase processing equipment，improve logistics system，and expand sales channel，etc.As a result，it will limit the development of various links.Besides，technology is relatively backward，so it is difficult to convert primary agricultural products to processing products，hard to increase added value of agricultural products and difficult to improve the quality of agricultural products.Then，it will fail to satisfy market demand and extend agricultural industrial chain.Furthermore，it is difficult to put management in place，impossible to fully promote reasonable flow of factors within the agricultural industrial chain，and finally agricultural enterprises will not meet scale barriers.When excessive agricultural enterprises enter，it will inevitably lead to inferior products，which will influence market demand and become unfavorable for sustainable growth of agricultural industrial chain.For small peasant operating households，they lack fund and their technology and management knowledge is limited，so the barriers to entry and exit are much lower.Under intense competition，farmers' income is extremely unstable，so farmers lack planting enthusiasm，and it will also limit growth of agricultural industrial chain.Therefore，as foundation of agricultural industrial chain，small agricultural enterprises and farmer households fail to bring into play allocation function of resource elements，and other income will be unstable，finally it will lead to low level of agricultural industrial chain.

Fig.1 Mechanism of grow th of agricultural industrial chain

3.2 Participating subjectsFrom planting and processing to circulation，the process of agricultural industrial chain mainly includes three participating subjects：farmer households，manufacturers and distributors.Once agricultural development is restricted by scale，these subjects have no ability of integrating agricultural industrial chain.For individual farmer household，planting scale is small；manufacturers have limited production capacity and backward technology fails to guarantee product quality，and the bargaining ability is low and their dependence on market is high；distributors can not obtain timely and accurate market information and lack corresponding marketing knowledge and experience，so they do not have original force promoting integration of agricultural industrial chain.Therefore，the growth of agricultural industrial chain needs relying on a certain powerful subject as leader，to bring and connect other participating subjects，ultimately to promote growth of agricultural industrial chain.

4 Actual factors restricting the grow th of China's agricultural industrial chain

4.1 The connection of China's agricultural industrial chain is not closeAt present，China's agricultural industrial chain mainly remains at the stage of primary agricultural products.Processing，storage，and sales of downstream agricultural products are backward，thus there is still no series product development and product chain.Besides，in-depth development and added value of agricultural products are inadequate，agricultural industrial chain is short，middle links are few，and industrial chain is narrow，and there is still no mature chain network.In addition，in China，departments providing scientific research and materials for agricultural production and those providing processing and sales services of agricultural products are mainly situated in cities and towns，while the middle link，agricultural production in the agricultural industrial chain，is isolated in rural areas.The distance between links of the industrial chain is too long and the links are isolated from each other，so it fails to bring into play cooperation between upstream and downstream industries，consequently lead to waste of technologies and other resources，and fail to bring into play coordination with other links and overall function of the industrial chain.

4.2 Benefit coordination mechanism of China's industrial chain is not inatureIn agricultural industrial chain，there are multiple economic entities，and it is the benefit that connects them together.Situated at the bottom of the industrial chain，farmer households are separate and do not have bargaining ability and their benefit demand will not be satisfied.In addition to information asymmetry，farmer households will lose advantage in price of agricultural products and stand in weak and unfavorable position.Lack of benefit coordinating mechanism of＂benefit sharing and risk sharing＂will be unfavorable for stable growth of agricultural industrial chain.

4.3 Small peasant operation mode leads to farmers' lack of ability to resisting risksAlthough there are various factors leading to backward development of China's agricultural industrial chain，the scale restriction in small peasant economy is an essential factor.Since the reform and opening up，China implemented the household contract responsibility system which separates land ownership and management right，greatly liberates rural labor，and improves farmers planting enthusiasm.Nevertheless，the right to use is divided according to the number of family members.For China with large number of farmer households，land use is subdivided unlimitedly and agricultural production takes on segmented and decentralized operation pattern.Such decentralized small scale production leads to restriction of agricultural economic development by scale，which is extremely unfavorable for integration of agricultural industrial chain.

From structure-conduct-performance（SCP）paradigm of economics，in market structure，individual farmer households have weak bargaining ability of market price and weak ability of resisting market risks.In the transaction，they have to be price taker，and they completely stay at weak position and do not have any resisting and bargaining ability.In addition，in the supply of some agricultural production means and sales of bulk agricultural products，there is still monopolistic operation of state or local government，which will lead to poor connection of all links in production of agricultural products with market.In market behavior，due to decentralization of farmer households，their market behavior is mainly limited by external environment.Then，farmers' specialized competition behavior，production expansion，and pricing action will have huge system obstacle and ability obstacle.Consequently，it fails to form orderly market competition behavior.In market performance，individual farmer households do not have powerful organizations to rely on and it is difficult for them to adopt advanced technology.Agricultural production efficiency is low，and agricultural operation does not have large scale and marketization characteristics.Therefore it is difficult to realize high income.Separate farmer household operation limits accumulation of fund，acquisition of information，flow of talents and implementation of management.According to theory of transaction cost，such separate farmer households will make related market survey and information search，to reduce market risk.This will increase transaction cost of agricultural products.Even if they searched corresponding market information，negotiation and contract conclusion will also need cost.If breach of contract occurs due to certain reason，it will not only damage benefits of both parties，but also increase high transportation cost and transaction cost.As a result，scale restriction becomes a huge obstacle to integration of agricultural industrial chain.

To solve the conflict between small production and large market and promote growth of agricultural industrial chain，it is required to organize separate farmer households and incorporate farmer households into internal enterprises to realize large scale agricultural production.This not only changes agricultural operation mode，reduces production cost of farmer households，increases their income，but also increases their ability in agricultural investment and is favorable for realizing benign cycle of agricultural economy.It not only increases land production efficiency，labor productivity and scale benefit，but also increases ability of resisting natural risks and market risks.Besides，it also brings into full play allocation ability of resources including land，technology，labor and fund，and will be favorable for realizing specialized agricultural production，mechanized operation，large scale operation，socialized service，and scientific management，so as to comprehensively realize agricultural modernization.

5 Measures for the grow th of agricultural industrial chain through large scale operation

To promote the growth of agricultural industrial chain，we can start from following three aspects.The first is extending the industrial chain.Through extending forward and backward，it is able to make deep processing of primary agricultural products to obtain higher added value.Thus，it is recommended to make longitudinal extension（for high technology and knowledge of various links）and horizontal extension（deep processing of agricultural products and increase in industrial links）and regional extension（for establishing industrial clusters in certain range with the aid of modern information platform and accessible logistics network）.The second is optimizing industrial chain.It is recommended to move forward to high technology，knowledge，high capital intensive and high added value sectors，highly optimize industrial organizations of industrial chain，and improve quality of the entire industrial chain.The third is integrating the industrial chain.According to social resources and market demand，it is required to properly allocate resource elements of industrial chain，integrate logistics，information flow，value flow and various operating entities，reduce transaction costs，and raise market controlling ability，to obtain coordination in industrial chain and maximize value of the entire industrial chain.However，no matter what kind，it is inseparable from large scale agriculture.Only through realizing large-scale agriculture，may it be able to gather various factors and promote the growth of agricultural industrial chain.Thus，from the perspective of large scale，we should promote growth of agricultural industrial chain from following aspects.

5.1 Breaking system bottleneck of large-scale operation

（i）Land circulation system.It is required to establish and improve land circulation mechanism，make clear property ownership，make farmer households own complete land leasehold and right to subscribe shares，to promote circulation of farmland use right and realize moderate scale operation.（ii）Financial system.It is recommended to set up and improve rural credit guarantee system and agricultural insurance system，increase mortgage range，establish financial support system suitable for rural characteristics，and solve the fund bottleneck in the growth of agricultural industrial chain.（iii）Smooth rural labor flow system.It is recommended to reform household registration system，remove various obstacles to labor flow resulted from urban and rural dual structure，and establish integrated labor market.（iv）Social security mechanism.Government should strengthen policy support，set up wide and diverse rural social security mechanism，reduce worry of farmers，and improve farmers' enthusiasm for participating large-scale operation.

5.2 Matching management conditions of large-scale operation（i）Optimizing organization structure.It is recommended to set up flat and compact personnel and flexible organization structure，to simplify management procedure，and information transmission will be more convenient and swift，accurate and high efficient.This not only can reduce management cost，but also make rapid response according to market situation.（ii）Simplifying operation process.Since farmers' educational level is relatively low and overall quality is not high，it is required to simplify technical standards for farmer households in participating in production links of agricultural product production.Through specialized technicians of enterprises providing regular technical guidance and overall training for farmer households，it is expected to gradually realize standardization and specialization.（iii）Standardized benefit allocation.Farmer households stay weak position.Thus，to prevent damage of mutual benefit due to opportunism，it is required to establish excellent benefit allocation mechanism，set up excellent trust foundation and corporate culture and fully safeguard benefits of subjects of agricultural industrial chain.（iv）Incubating management personnel.It is required to strengthen cultivation of new farmers，explore and cultivate potential agricultural entrepreneurs，to provide talented backbone entrepreneurs for growth of agricultural industrial chain.（v）Strengthening scientific and technological innovation.Technological elements play positive role in promoting growth of agricultural industrial chain.Without support of advanced technology，it is very difficult to convert primary agricultural products into processing products，and also difficult to improve quality and increase added value of agricultural products，then it is impossible to satisfy market demand and impossible to extend agricultural industrial chain.Only through strengthening popularization and application of agricultural science and technology，and enhancing innovation of agricultural science and technology，may agricultural industrial chain realize sustainable development.

5.3 Promoting the grow th of agricultural industrial chain through large scale operation（i）Large-scale organization.It is recommended to learn from foreign experience，encourage farmers to actively participate organizations，set up cooperatives suitable for local economic development，realize integrated operation and management， improve farmers' organization， and raise farmers' ability of resisting natural and market risks.Besides，we should bring into full play functions of farmers' cooperatives in providing services for the whole process of production，and change specialized cooperatives to comprehensive ones.Furthermore，it is recommended to promote establishment of agricultural production enterprises，agricultural product processing enterprises and agricultural service enterprises，so as to promote allocation and flow of growth factors of agricultural industrial chain，bring into play scale effect，especially leader role of leading enterprises，connect links of agricultural industrial chain，and integrated growth factors of agricultural industrial chain.（ii）Large-scale service.It is required to improve construction of rural infrastructure，improve rural environment，guide large enterprises to go to rural areas and develop agricultural service industry，to provide specialized services for pre-production，in-production and post-production process，and build wide，comprehensive，diversified and multiple level and type social service system，to realize agricultural mechanization，standardization and large-scale operation.（iii）Largescale industrial distribution.It is required to make scientific and reasonable spatial distribution according to local resource endowment and actual conditions.Besides，it is recommended to build a good many large industrial parks with distinct industrial characteristics and being able to increase farmers' income and having high competitive power in accordance with differentiation principle and local advantage principle.（iv）Large-scale industrial chain.All areas should conduct more activities for inviting outside investment，speed up flow of funds，technologies and talents，and other production factors，energetically develop fine and deep processing of agricultural products，build multi-functional comprehensive industrial system with integration of upstream，midstream and downstream，and primary，secondary and tertiary industries，and mutual promotion of production，supply and sales，to bring into full play overall functions of the agricultural industrial chain.

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