This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Contract and Exit Decisions in Finisher Hog Production

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Dong, Fengxia
Hennessy, David A.
Jensen, Helen H.

Additional information is available for the following registered author(s):

Abstract

Finisher hog production in North America has seen a shift toward larger production units and contract-organized production since circa 1990. Given the efficiency gains and conversion costs associated with contract production, growers may have to choose between long term commitment through investments and atrophy with intent to exit in the intermediate term. A model is developed to show that growers with any of three efficiency attributes (lower innate hazard of exit, variable costs, or fixed contract adoption costs) are not only more likely to contract but will also produce more and expend more on lowering business survival risks. Using the 2004 U.S. Agricultural Resource Management Survey for hogs, a recursive bivariate probit model is estimated in which exit is affected directly, and also indirectly through the contract decision. It is confirmed that contracting producers are less likely to exit. Greater specialization and regional effects are important in increasing the probability of contracting. More education, having non-farm income and older production facilities are significant in increasing the expected rate of exit. The findings suggest further exits by non-contract producers.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://purl.umn.edu/49343
File Format: application/pdf
File Function:
Download Restriction: no

Publisher Info
Paper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49343.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length:
Date of creation: 2009
Date of revision:
Handle: RePEc:ags:aaea09:49343

Contact details of provider:
Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202
Phone: (414) 918-3190
Fax: (414) 276-3349
Email:
Web page: http://www.aaea.org
More information through EDIRC

For technical questions regarding this item, or to correct its listing, contact: (AgEcon Search).

Related research
Keywords: agricultural industrialization; hog production; occupation choice; production contracts; recursive bivariate probit; relationship-specific investments; sector dynamics.; Agricultural and Food Policy; Demand and Price Analysis; Production Economics; D23; Q12; J26; J43.;

Other versions of this item:

This paper has been announced in the following NEP Reports: 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. Jeffrey J. Reimer, 2006. "Vertical Integration in the Pork Industry," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 88(1), pages 234-248, 02. [Downloadable!] (restricted)
  2. MacDonald, James M. & Korb, Penni, 2006. "Agricultural Contracting Update: Contracts in 2003," Economic Information Bulletin 33903, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  3. Peter Cappelli & Monika Hamori, 2008. "Are Franchises Bad Employers?," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 61(2), pages 147-162, January. [Downloadable!] (restricted)
  4. Heckman, James J, 1978. "Dummy Endogenous Variables in a Simultaneous Equation System," Econometrica, Econometric Society, vol. 46(4), pages 931-59, July. [Downloadable!] (restricted)
    Other versions:
  5. Christofides, Louis N. & Stengos, Thanasis & Swidinsky, Robert, 1996. "On the Calculation of Marginal Effects in the Bivariate Probit Model," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich.
    Other versions:
  6. Milgrom, Paul & Roberts, John, 1990. "The Economics of Modern Manufacturing: Technology, Strategy, and Organization," American Economic Review, American Economic Association, vol. 80(3), pages 511-28, June. [Downloadable!] (restricted)
  7. Key, Nigel & McBride, William D., 2007. "Production Contracts And Farm Productivity: Examining The Link Using Instrumental Variables," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9716, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  8. Ann Bartel & Casey Ichniowski & Kathryn Shaw, 2004. "Using "Insider Econometrics" to Study Productivity," American Economic Review, American Economic Association, vol. 94(2), pages 217-223, May. [Downloadable!]
  9. Huffman, Wallace E, 1977. "Allocative Efficiency: The Role of Human Capital," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 59-79, February. [Downloadable!] (restricted)
  10. 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!]
  11. Nigel Key & William McBride, 2003. "Production Contracts and Productivity in the U.S. Hog Sector," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(1), pages 121-133, 02. [Downloadable!] (restricted)
  12. Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May. [Downloadable!]
  13. Nigel Key & Michael J. Roberts, 2006. "Government Payments and Farm Business Survival," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 88(2), pages 382-392, 05. [Downloadable!] (restricted)
  14. Kimhi, Ayal & Bollman, Ray, 1999. "Family farm dynamics in Canada and Israel: the case of farm exits," Agricultural Economics, Blackwell, vol. 21(1), pages 69-79, August. [Downloadable!] (restricted)
  15. Hennessy, David A. & Lawrence, John D., 2000. "Contractual Relations, Control, and Quality in the Hog Sector," Staff General Research Papers 1706, Iowa State University, Department of Economics.
  16. Nigel Key, 2005. "How much do farmers value their independence?," Agricultural Economics, International Association of Agricultural Economists, vol. 33(1), pages 117-126, 07. [Downloadable!] (restricted)
  17. Väre, Minna & Heshmati, Almas, 2004. "Perspectives on the Early Retirement Decisions of Farming Couples," IZA Discussion Papers 1342, Institute for the Study of Labor (IZA). [Downloadable!]
  18. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September. [Downloadable!] (restricted)
  19. Gillespie, Jeffrey M. & Eidman, Vernon R., 1998. "The Effect Of Risk And Autonomy On Independent Hog Producers' Contracting Decisions," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 30(01), July. [Downloadable!]
  20. William H. Greene, 1998. "Gender Economics Courses in Liberal Arts Colleges: Further Results," Journal of Economic Education, Helen Dwight Reid Foundation, vol. 29(4), pages 291-300. [Downloadable!]
  21. Ayal Kimhi & Ramon Lopez, 1999. "A Note on Farmers' Retirement and Succession Considerations: Evidence from a Household Survey," Journal of Agricultural Economics, Blackwell Publishing, vol. 50(1), pages 154-162. [Downloadable!] (restricted)
  22. Jeremy D. Foltz, 2004. "Entry, Exit, and Farm Size: Assessing an Experiment in Dairy Price Policy," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 86(3), pages 594-604, 08. [Downloadable!] (restricted)
  23. Michael Roberts & Nigel Key, 2007. "Losing Under Contract: Transaction-Cost Externalities and Spot Market Disintegration," Journal of Agricultural & Food Industrial Organization, Berkeley Electronic Press, vol. 3(2), pages 1094-1094. [Downloadable!] (restricted)
    Other versions:
  24. Monika Hamori, 2006. "Are franchises bad employers?," Working Papers Economia wp06-11, Instituto de Empresa, Area of Economic Environment. [Downloadable!]
Full references

Statistics
Access and download statistics

Did you know? You can use convenient plug-ins to search directly IDEAS from your browser.

This page was last updated on 2009-11-11.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.