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An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans

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  • Paulson Nicholas D

    (University of Illinois at Urbana-Champaign)

  • Katchova Ani L

    (University of Kentucky)

  • Lence Sergio H

    (Iowa State University)

Abstract

Contracts serve as coordination mechanisms which allocate value, risk, and decision rights across buyers and sellers. The use of marketing contracts in agriculture, specifically for crop production, has been increasing over the past decade. This study investigates the determinants of agricultural marketing contract design employing data from the USDA's Agricultural Resource Management Survey. Models are estimated to analyze the association between producer and contractor characteristics, the decision to produce under contract, and the types of contract structures observed in practice, while controlling for the potential for endogenous matching between contracting parties. Results indicate that while certain producer characteristics are significantly associated with the decision to produce corn or soybeans under contract, there is no significant association between those characteristics and specific contract attributes.

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Bibliographic Info

Article provided by De Gruyter in its journal Journal of Agricultural & Food Industrial Organization.

Volume (Year): 8 (2010)
Issue (Month): 1 (May)
Pages: 1-25

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Handle: RePEc:bpj:bjafio:v:8:y:2010:i:1:n:4

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  1. Iain Fraser, 2005. "Microeconometric analysis of wine grape supply contracts in Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 23-46, 03.
  2. Theofanis Tsoulouhas & Tomislav Vukina, 1999. "Integrator Contracts with Many Agents and Bankruptcy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 61-74.
  3. Velandia, Margarita M. & Rejesus, Roderick M. & Knight, Thomas O. & Sherrick, Bruce J., 2009. "Factors Affecting Farmers’ Utilization of Agricultural Risk Management Tools: The Case of Crop Insurance, Forward Contracting, and Spreading Sales," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(01), April.
  4. Coble, Keith H. & Heifner, Richard G. & Zuniga, Manuel, 2000. "Implications Of Crop Yield And Revenue Insurance For Producer Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
  5. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Food Industry Vertical Integration," Staff General Research Papers 5032, Iowa State University, Department of Economics.
  6. Brent Hueth & Ethan Ligon, 1999. "Producer Price Risk and Quality Measurement," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(3), pages 512-524.
  7. Allen, Douglas W & Lueck, Dean, 1999. "The Role of Risk in Contract Choice," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(3), pages 704-36, October.
  8. Brian Roe & Thomas L. Sporleder & Betsy Belleville, 2004. "Hog Producer Preferences for Marketing Contract Attributes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 115-123.
  9. Ackerberg, D.A. & Botticini, M., 1999. "Endogenous Matching and the Empirical Determinants of Contract Form," Papers 96, Boston University - Department of Economics.
  10. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1980. "Farmer Education and Farm Efficiency: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 29(1), pages 37-76, October.
  11. Keita Fukunaga & Wallace E. Huffman, 2009. "The Role of Risk and Transaction Costs in Contract Design: Evidence from Farmland Lease Contracts in U.S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 237-249.
  12. Hennessy, David A. & Lawrence, John D., 1999. "Contractual Relations, Control, and Quality in the Hog Sector," Staff General Research Papers 1706, Iowa State University, Department of Economics.
  13. Bruce J. Sherrick & Peter J. Barry & Paul N. Ellinger & Gary D. Schnitkey, 2004. "Factors Influencing Farmers' Crop Insurance Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 103-114.
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Cited by:
  1. Anastassiadis, Friederieke & Feil, Jan-Henning & Musshoff, Oliver & Schilling, Philipp, 2013. "Analysing farmers' use of price hedging instruments: an experimental approach," DARE Discussion Papers 1306, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
  2. Katchova, Ani L., 2013. "Agricultural Contracting and Agrifood Competition," Staff Papers 164515, University of Kentucky, Department of Agricultural Economics.

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