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Quality Measurement and Contract Design: Evidence from the North American Sugar Beet Industry

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  • Melkonian, Tigran A.

Abstract

This paper examines contracts used in the North American sugarbeet industry. Though quite similar in many respects, the contracts we study vary across processing firms in the set of quality measures used to condition contract payments to growers. This is somewhat surprising, given the homogeneous nature of the processors' finished product (refined sugar). It seems unlikely that processors differ significantly in how they value the various attributes of a sugarbeet, and such a difference is perhaps the most natural reason to expect variation in the structure of quality incentives across processors. Previous attempts to explain the observed variation in sugarbeet contracts have focused on differences in organizational form across firms. In this paper, we provide an alternative explanation that relies on variation across production regions in growers' ability to control the relevant measures of sugarbeet quality.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12350.

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Date of creation: 01 Jan 2004
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Publication status: Published in Canadian Journal of Agricultural Economics 2004, vol. 52, pp. 165-181
Handle: RePEc:isu:genres:12350

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Cited by:
  1. Hueth, Brent & Marcoul, Philippe & Ginder, Roger G., 2005. "Cooperative Formation And Financial Contracting In Agricultural Markets," 2005 Annual meeting, July 24-27, Providence, RI 19324, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Xiaohua Yu & David Abler & Chao Peng, 2011. "Dancing with the Dragon Heads: Enforcement, Innovations and Efficiency of Contracts between Agricultural Processors and Farmers in China," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 63, Courant Research Centre PEG.
  3. Jaenicke, Edward C. & Shields, Martin & Kelsey, Timothy W., 2007. "Food Processors’ Use of Contracts to Purchase Agricultural Inputs: Evidence from a Pennsylvania Survey," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), October.

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