Influences of Farmland Transfer Transaction Costs on Contract Choices from the Perspective of Differential Order Governance: Based on a Survey of Farmers in Henan Province

Abstract

Under the heterogeneous situation of heterogeneity of farmland circulation entities, transaction costs are the key factors to optimize the selection of circulation contracts, and reducing transaction costs is an important realization path to promote farmland circulation in a reasonable and orderly manner and accelerate the process of agricultural modernization. Based on the survey data of 814 farming households in Henan Province, this study explores the transaction costs on contract selection based on the differential order governance. The results show that (a) in the transfer of farmland, farmers’ choice of contracts is restricted by their degree of association with the transaction entity, which is the result of differential order governance. (b) The influence of differential order governance on the selection of transfer contracts is constrained by the governance context. Farmers tend to choose formal written contracts in the context of weak ties governance but choose verbal or informal contracts under strong relationship governance. (c) The impact of transaction costs on the selection of farmland transfer contracts is constrained by the three-stage scenarios as before, during, and after the transaction. In different transaction stages, the higher the transaction costs are, the more likely farmers are to choose a formal written contract. The findings show the importance of the rules of human relations in the society of acquaintances in saving transaction costs. The importance of the formal system and informal institutions, such as trust and reputation, and avoiding one-size-fits-all suggestions should be involved in the formulation and implementation of farmland transfer policies.