Abstract: Against the backdrop of rural revitalization strategy, this study focuses on issues of financial constraints on farmers and the inequitable distribution of income within agricultural supply chains. An agricultural supply chain is constructed, comprising a capital-constrained farmer and two retailers. Based on the Stackelberg game theory, we analyze the optimal operational decisions of the agricultural product supply chain under vertical fairness concern of the farmer and horizontal fairness concern of the small retailer. In line with industry practice, we explicitly examine the efficacy of two financing strategies - bank financing (BF) and trade credit financing (TCF). Additionally, numerical analysis is conducted to reveal the impact of financing interest rates and vertical and horizontal fairness concerns on the farmer’s financing strategy. Furthermore, the applicability of obtained conclusions in scenarios involving multiple farmers is validated through the model extension. The research findings indicate that when the interest rate difference between TCF and BF is within a certain range, the farmer tends to prefer the higher-interest TCF scheme. However, when the interest rate difference is substantial, the BF scheme becomes the superior choice. Secondly, the farmer’s vertical fairness concern to some extent can promote his own profit, but exceeding a certain threshold, it may lead to a decrease in the overall supply chain and individual members’ profits. Thirdly, the horizontal fairness concern of the retailer benefits the farmer but results in profit loss for the two peer retailers. What doesn’t fit our previous perception is the retailer’s horizontal fairness concern not only narrowing the profit gap between supply chain members, but also enabling the provision of higher-quality agricultural products to the market. In addition, the critical threshold for the farmer to change financing strategy decreases with an increase in both vertical and horizontal fairness concern coefficients. While some conclusions derived from the decision-making model of a single farmer in the agricultural supply chain can be extended to scenarios involving multiple farmers, the presence of fairness concerns among multiple farmers simultaneously results in a monotonic decrease in farmers’ profits with an increase in the degree of vertical fairness concern.

Key words: agricultural supply chain, capital-constrained, vertical and horizontal fairness concerns, Stackelberg game, financing strategies