Contract cultivation guarantees the price paid by farmers who join the contract, therefore it is regarded as an effective tool for stabilizing farmers’ income. However, contract cultivation may instigate over or under production, depending on the market situation. This paper develops a theoretical model that shows the negative and positive effects on the income of the farmers who are joining and not joining the government-subsidized contract with farmers’ cooperative. A simulation model is designed for assessing the effects of contract cultivation. Analytical results indicate that contract cultivation leads to the change in revenue for the farmers who joined the contract by 66.48 to –26.35 percent for napa cabbage and by 6.89 to 13.12 percent for garlic.