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

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Author Info
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.

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File URL: http://purl.umn.edu/15048
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Publisher Info
Article provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.

Volume (Year): 29 (1997)
Issue (Month): 02 (December)
Pages:
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Handle: RePEc:ags:joaaec:15048

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Related research
Keywords: Livestock Production/Industries;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Johnson, C. Scott & Foster, Kenneth A., 1994. "Risk Preferences And Contracting In The U.S. Hog Industry," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(02), December. [Downloadable!]
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hueth, Brent & Ligon, Ethan & Dimitri, Carolyn, 2007. "AJAE Appendix: Agricultural Contracts: Data and Research Needs," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, vol. 89(5), December. [Downloadable!]
  2. Mussell, Al & Mayer, Holly & Martin, Larry & Grier, Kevin & Westgren, Randy, 2003. "PRICE DISCOVERY MECHANISMS AND ALTERNATIVES FOR CANADIAN AGRICULTURE; Part I: A Review of Pricing Mechanisms in Agriculture," Miscellaneous Publications 18121, George Morris Center. [Downloadable!]
  3. Jaenicke, Edward C. & Wang, Yanguo, 2004. "Simulating The Impacts Of Contract Supplies In A Spot Market-Contract Market Equilibrium Setting," 2004 Annual meeting, August 1-4, Denver, CO 20313, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Martinez, Steve W., 2000. "Price and Quality of Pork and Broiler Products: What's the Role of Vertical Coordination?," Agricultural Information Bulletins 33759, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  5. Jaenicke, Edward C. & Shields, Martin & Kelsey, Timothy W., 2007. "Food Processors’ Use of Contracts to Purchase Agricultural Inputs: Evidence from a Pennsylvania Survey," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), October. [Downloadable!]
  6. McBride, William & Key, Nigel, 2001. "Factors Affecting Contractor And Grower Success In Hog Contracting," 2001 Annual meeting, August 5-8, Chicago, IL 20552, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  7. Skully, David, 1998. "Opposition To Contract Production: Self-Selection, Status, And Stranded Assets," 1998 Annual meeting, August 2-5, Salt Lake City, UT 21012, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  8. Preckel, Paul & Boehlje, Michael & Gray, Allan & Kim, Sounghun, 2004. "Vertically Aligned Vs. Open Market Coordination: Dominance Or Co-Existence?," 2004 Annual meeting, August 1-4, Denver, CO 20099, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  9. Darren Hudson, 2004. "Cross-Commodity Perspective on Contracting: Evidence from Mississippi," Industrial Organization 0412005, EconWPA. [Downloadable!]
    Other versions:
  10. Dubois, Pierre & Vukina, Tomislav, 2006. "Optimal Incentives under Moral Hazard and Heterogeneous Agents: Evidence from Production Contracts Data," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25568, International Association of Agricultural Economists. [Downloadable!]
    Other versions:
  11. Volpe, Richard J., III, 2006. "Exploring the Potential Effects of Organic Production on Contracting in American Agribusiness," 2006 Annual meeting, July 23-26, Long Beach, CA 21086, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  12. Martinez, Steve W., 2002. "Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries," Agricultural Economics Reports 34051, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  13. Poray, Michael & Gray, Allan & Boehlje, Michael & Preckel, Paul V., 2003. "Evaluation of Alternative Coordination Systems Between Producers and Packers in the Pork Value Chain," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 6(02). [Downloadable!]
  14. Robison, Lindon J. & Schmid, A. Allan & Barry, Peter J., 2002. "The Role of Social Capital in the Industrialization of the Food System," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 31(1), April. [Downloadable!]
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