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Farmers' Use of Marketing and Production Contracts

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  • Farm Business Economics Branch
  • Rural Economy Division
  • Economic Research Service

Abstract

Contracts are an integral part of the production and marketing of selected livestock commodities, such as broilers, turkeys, eggs, and milk. Such crops as fruit, vegetables, and sugar beets and cane are mostly produced under contracts. In the past, farm receipts were assumed to be distributed across all farm families in proportion to their production. Today, contractors receive a large share of farm receipts, formerly assumed to go to the operator's family. Contractors typically bear a large share of production and price risk, and earn the majority of net income from the commodity's production. Farmers may benefit by being able to expand their operations more rapidly than otherwise possible--perhaps with less debt and fewer financial risks.

Suggested Citation

  • Farm Business Economics Branch & Rural Economy Division & Economic Research Service, 1996. "Farmers' Use of Marketing and Production Contracts," Agricultural Economic Reports 262041, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uerser:262041
    DOI: 10.22004/ag.econ.262041
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    References listed on IDEAS

    as
    1. H. K. Leckie, 1958. "Dynamics of the Integration of Agricultural Production and Marketing," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 40(5), pages 1356-1367.
    2. Harris, Marshall & Massey, Dean T., 1968. "Vertical Coordination Via Contract Farming," Miscellaneous Publications 312512, United States Department of Agriculture, Economic Research Service.
    3. Reimund, Donn A. & Moore, Charles V. & Martin, J. Rod, 1977. "Factors Affecting Structural Change in Agricultural Subsectors: Implications for Research," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 9(1), pages 11-19, July.
    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.
    5. Reimund, Donn A. & Moore, Charles V. & Martin, J. Rod, 1977. "Factors Affecting Structural Change In Agricultural Subsectors: Implications For Research," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 9(1), pages 1-9, July.
    6. Gallimore, William W. & Vertrees, James G., 1968. "A Comparison of Returns to Poultry Growers ...Under Contract ...Operating Independently," Marketing Research Reports 312189, United States Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program.
    7. Manchester, Alden C., 1992. "Rearranging The Economic Landscape: The Food Marketing Revolution, 1950-91," Agricultural Economic Reports 308263, United States Department of Agriculture, Economic Research Service.
    8. Rhodes, V. James, 1990. "U.S. Contract Production of Hogs," Miscellaneous Reports 257763, University of Missouri Columbia, Department of Agricultural Economics.
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    Cited by:

    1. Goodhue, Rachael E., 1997. "Production Control and Production Contracts: Why Do Integrators Control Inputs?," 1997 Annual Meeting, July 13-16, 1997, Reno\ Sparks, Nevada 35908, Western Agricultural Economics Association.

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