Abstract: The yield of the crops is influenced by the natural environment heavily, as a result of the changes of weather and seasons, the yield of the crops are stochastic. Considering the stochastic characters of the market demand, the agricultural supply chain faces both yield uncertainty and demand uncertainty. Consequently, how to design an efficiency contract to reduce the harm of the uncertainties is an urgent problem for both the supplier and manufacturer in the agricultural supply chain. Through adopting a price-subsidies’ risk-sharing mechanism, it is analyzed that different risk-sharing contracts which supplier and manufacturer used will bring the differences of agricultural investment, supplier’s profit, manufacturer’s profit and entire supply chain’s profit. The risk-sharing contracts in the paper include no risk-sharing contract, yield risk-sharing contract, demand risk-sharing contract and yield-demand risk-sharing contract. Combined with numerical calculation, it is concluded that sharing the risk of demand could increase the profits of the chain and each firm, while by sharing the yield risk, the manufacturer can change the investment proportion of the supplier, and the yield-demand risk sharing is benefit for both the supplier and the manufacturer. They construal and coordinate each other to prompt the supply chain’s development. In addition, the non-linear price-subsidies’ risk-sharing mechanism for the risk-sharing contracts is shown as an example. The analysis shows that the form of the price-subsidies can only influence the decisions quantitatively, while the findings are substantially the same.

Key words: agricultural supply chain, risk-sharing, random yield, stochastic demand, price-subsidies