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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.

Abstract

Contracts serve as coordination mechanisms which allocate value, risk, and decision rightsacross 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 ofagricultural marketing contract design employing data from the USDA’s Agricultural ResourceManagement Survey. Models are estimated to analyze the association between producer and contractorcharacteristics, the decision to produce under contract, and the types of contract structuresobserved in practice, while controlling for the potential for endogenous matching betweencontracting parties. Results indicate that while certain producer characteristics are significantlyassociated with the decision to produce corn or soybeans under contract, there is no significantassociation between those characteristics and specific contract attributes.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 31523.

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Date of creation: 21 May 2010
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Publication status: Published in , May 2010, vol. 8 no. 1
Handle: RePEc:isu:genres:31523

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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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Keywords: contracts; marketing contracts; endogenous matching; corn; soybeans;

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  1. 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, Agricultural and Applied Economics Association, vol. 86(1), pages 115-123.
  2. 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.
  3. Daniel A. Ackerberg & Maristella Botticini, 1999. "Endogenous Matching and the Empirical Determinants of Contract Form," Papers, Boston University - Industry Studies Programme 0096, Boston University - Industry Studies Programme.
  4. Hennessy, David A., 1996. "Information Asymmetry As a Reason for Food Industry Vertical Integration," Staff General Research Papers, Iowa State University, Department of Economics 5032, Iowa State University, Department of Economics.
  5. Hennessy, David A. & Lawrence, John D., 1999. "Contractual Relations, Control, and Quality in the Hog Sector," Staff General Research Papers, Iowa State University, Department of Economics 1706, Iowa State University, Department of Economics.
  6. 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, Agricultural and Applied Economics Association, vol. 91(1), pages 237-249.
  7. Brent Hueth & Ethan Ligon, 1999. "Producer Price Risk and Quality Measurement," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 81(3), pages 512-524.
  8. 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, Agricultural and Applied Economics Association, vol. 86(1), pages 103-114.
  9. 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.
  10. 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, Western Agricultural Economics Association, vol. 25(02), December.
  11. Allen, Douglas W & Lueck, Dean, 1999. "The Role of Risk in Contract Choice," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 15(3), pages 704-36, October.
  12. Theofanis Tsoulouhas & Tomislav Vukina, 1999. "Integrator Contracts with Many Agents and Bankruptcy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 81(1), pages 61-74.
  13. 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, Southern Agricultural Economics Association, vol. 41(01), April.
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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, University of Kentucky, Department of Agricultural Economics 164515, University of Kentucky, Department of Agricultural Economics.

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