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Production Contracts, Risk Shifting, And Relative Performance Payments In The Pork Industry

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  • Martin, Laura L.

Abstract

Actual performance records of production contract farmers are used to assess the extent to which contract production reduces the risk borne by pork producers. Comparisons of contracting relative to independent market production reveal that farmers who enter into production contracts based on absolute performance measures reduce risks associated with variable income. Weak evidence is found that relative performance contracts, similar to those used in the broiler chicken industry, further reduce income variability. The effectiveness of such relative performance contracts will rely on several factors; among these are increased contract production and a more uniform pork production and processing system.

Suggested Citation

  • Martin, Laura L., 1997. "Production Contracts, Risk Shifting, And Relative Performance Payments In The Pork Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(2), pages 1-12, December.
    • Handle: RePEc:ags:joaaec:15048
    DOI: 10.22004/ag.econ.15048
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    References listed on IDEAS

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    2. Scott Johnson, C. & Foster, Kenneth A., 1994. "Risk Preferences and Contracting In the U.S. Hog Industry," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 393-405, December.
    3. Kliebenstein, James, 1992. "Evaluation of Pork Production Contracts," ISU General Staff Papers 199207010700001241, Iowa State University, Department of Economics.
    4. Charles R. Knoeber & Walter N. Thurman, 1995. ""Don't Count Your Chickens...": Risk and Risk Shifting in the Broiler Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(3), pages 486-496.
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    Livestock Production/Industries;

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