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Agricultural Contracting Update: Contracts in 2008

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  • MacDonald, James M.
  • Korb, Penelope J.
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    Abstract

    Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2008, up from 36 percent in 2001, and a substantial increase over 28 percent in 1991 and 11 percent in 1969. However, aggregate contract use has stabilized in recent years and no longer suggests a strong trend. Contracts between farmers and their buyers are reached prior to harvest (or before the completion stage for livestock)and govern the terms under which products are transferred from the farm. Contracts are far more likely to be used on large farms than on small farms, and they form one element in a package of risk management tools available to farmers. Production contracts are used widely in livestock production, while marketing contracts are important to the production of many crops.

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    Bibliographic Info

    Paper provided by United States Department of Agriculture, Economic Research Service in its series Economic Information Bulletin with number 101279.

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    Date of creation: Feb 2011
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    Handle: RePEc:ags:uersib:101279

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    Keywords: Production contracts; marketing contracts; farm structure; farm size; farm income; contracting; Agricultural Resource Management Survey; ARMS; risk analysis; Agribusiness; Farm Management; Livestock Production/Industries; Risk and Uncertainty;

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    1. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economics Reports 34081, United States Department of Agriculture, Economic Research Service.
    2. Key, Nigel, 2013. "Production Contracts and Farm Business Growth and Survival," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(02), May.
    3. Shawn Cole & Barrett Kirwan, 2009. "Between the Corporation and the Household: Commodity Prices, Risk Management, and Agricultural Production in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1243-1249.
    4. Dimitri, Carolyn, 2002. "Contract Evolution And Institutional Innovation: Marketing Pacific-Grown Apples From 1890 To 1930," The Journal of Economic History, Cambridge University Press, vol. 62(01), pages 189-212, March.
    5. Sandeep Mohapatra & Rachael E. Goodhue & Colin A. Carter & James A. Chalfant, 2010. "Effects of Forward Sales on Spot Markets: Pre-commitment Sales and Prices for Fresh Strawberries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 152-163.
    6. MacDonald, James M. & McBride, William D., 2009. "The Transformation of U.S. Livestock Agriculture: Scale, Efficiency, and Risks," Economic Information Bulletin 58311, United States Department of Agriculture, Economic Research Service.
    7. Key, Nigel D., 2004. "Agricultural Contracting and the Scale of Production," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 33(2), October.
    8. Rachael E. Goodhue & Dale M. Heien & Hyunok Lee & Daniel A. Sumner, 2003. "Contracts and Quality in the California Winegrape Industry," Review of Industrial Organization, Springer, vol. 23(3_4), pages 267-282, December.
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    Cited by:
    1. Sporleder, Thomas L. & Boland, Michael A., 2011. "Exclusivity of Agrifood Supply Chains: Seven Fundamental Economic Characteristics," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), vol. 14(5).
    2. Okwo, Adaora & Thomas, Valerie M., 2014. "Biomass feedstock contracts: Role of land quality and yield variability in near term feasibility," Energy Economics, Elsevier, vol. 42(C), pages 67-80.
    3. MacDonald, James M., 2011. "Why Are Farms Getting Larger? The Case Of The U.S," 51st Annual Conference, Halle, Germany, September 28-30, 2011 115361, German Association of Agricultural Economists (GEWISOLA).

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