Abstract: Because of the high risk of agricultural supply chain financing and high cost of financing, the plight of agricultural supply chain financing becomes increasingly prominent, and seriously affects the development of agricultural modernization. To solve the supply chain financing difficulties of agricultural supply chain consisting of a capital-constrained farmer and an agribusiness firm, two different Stackelberg game models, in which the agribusiness firm as the leader and the farmer as the follower, are proposed respectively by considering bankruptcy risks of the farmer in supply chain financing under trade credit and uncertainty of production yield. In the meanwhile, the comparative analysis on the farmer's optimal decision making is performed, and the government compensation values for both the social welfare and the supply chain are discussed finally. The fingdings can be drawn as follows:(1) the smaller the input-output rate of the bad year is, the more favorable supply chain financing model, in which the farmer has the risk of bankruptcy, is to the farmer; (2) the government compensation policies can reduce the agribusiness firm's risk of advance payment and create more social welfare; (3) the government compensation policies can also motivate the farmer to design the proper input quantity of production to promote the supply chain efficiency, even to realize the optimal expected profit of centralized decision-making under certain conditions, and create more value for the capital-constrained supply chain. Finally, the numerical study is given to demonstrate the conclusions. Our research results not only provide some managerial insight to the decision-making of the farmer, but also help us have a new understanding of government compensation policies and recognize the importance of government compensation.

Key words: trade credit, farmer's decision, government compensation, capital constrains