Analysis of Risk Behavior in the U.S. Farm-raised Catfish Market
AbstractThe purpose of this research is to assess any risk-shifting behavior in the catfish market between processors and farmers. Over 93% of farm-raised catfish are sold through fish processing companies, and processors largely dictate the terms of trade, particularly size requirements. The classic agency theory model was used to investigate the relationship between catfish processors (principals) and catfish farmers (agents). The study used time-series regression techniques, incorporated into the classic principal-agent model, to examine the risk behavior of catfish processors. Results indicate that catfish processors do not shift risk, but bear all market risk. It appears that catfish processors maximize expected payoff by paying lower price to farmers and extract trade gains from bearing the market risks. Farmers may implicitly be paying high premiums by receiving lower prices. Delivery rights offered to catfish farmers as incentives for them to meet certain delivery conditions do not appear to have shifted risk.
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Bibliographic InfoArticle provided by Marine Resources Foundation in its journal Marine Resource Economics.
Volume (Year): 21 (2006)
Issue (Month): 4 ()
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Web page: http://www.uri.edu/cels/enre/mre/mre.htm
Risk shifting; agency theory; catfish marketing; Livestock Production/Industries; Marketing; Q130; C250; C530;
Find related papers by JEL classification:
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
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.:
- Frank Asche & Ola Flaaten & John R. Isaksen & Terje Vassdal, 2002. "Derived Demand and Relationships between Prices at Different Levels in the Value Chain: A Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(1), pages 101-107.
- Kuiper, W. Erno & Kuwornu, John K.M. & Pennings, Joost M.E., 2003. "Time Series Analysis Of A Principal-Agent Model To Assess Risk Shifting And Bargaining Power In Commodity Marketing Channels," 2003 Annual meeting, July 27-30, Montreal, Canada 22046, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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