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Agricultural Contracts and Alternative Marketing Options: A Matching Analysis

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  • Katchova, Ani L.

Abstract

The increasing use of agricultural contracts and processor concentration raises concerns that processors may offer lower contract prices in absence of local competition. This study examines the price competitiveness of marketing and production contracts depending on the availability of alternative marketing options. A propensity score matching method is used to compare prices using contract data from a farm-level national survey. The results show that the absence of other contractors or spot markets in producers' areas does not lead to statistically significant price differences in agricultural contracts for most commodities, providing evidence that most agricultural processors do not exercise market power by reducing prices when other local buyers are not available.

Suggested Citation

  • Katchova, Ani L., 2010. "Agricultural Contracts and Alternative Marketing Options: A Matching Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 42(2), pages 261-276, May.
    • Handle: RePEc:cup:jagaec:v:42:y:2010:i:02:p:261-276_00
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    Cited by:

    1. Paulson Nicholas D & Katchova Ani L & Lence Sergio H, 2010. "An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 8(1), pages 1-25, May.
    2. Ifft, Jennifer & Kuethe, Todd & Morehart, Mitch, 2015. "Does Federal Crop Insurance lead to higher farm debt use? Evidence from the Agricultural Resource Management Survey," Working Papers 250011, Cornell University, Department of Applied Economics and Management.
    3. Todd H. Kuethe & Mitch Morehart, 2012. "The profit impacts of risk management tool adoption," Agricultural Finance Review, Emerald Group Publishing Limited, vol. 72(1), pages 104-116, May.
    4. Ani L. Katchova & Ana Claudia Sant’Anna, 2019. "Impact of Ethanol Plant Location on Corn Revenues for U.S. Farmers," Sustainability, MDPI, vol. 11(22), pages 1-13, November.
    5. Frasa, Stefanie & Carlberg, Jared & Hogan, Robert, 2015. "Use of Contracts by Prairie Agricultural Producers," Working Papers 232328, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    6. Weber, Olaf & Ahmad, Adnan, 2014. "Empowerment Through Microfinance: The Relation Between Loan Cycle and Level of Empowerment," World Development, Elsevier, vol. 62(C), pages 75-87.
    7. Benjamin T. Anang & Stefan Bäckman & Antonios Rezitis, 2017. "Production technology and technical efficiency: irrigated and rain-fed rice farms in northern Ghana," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 7(1), pages 95-113, April.
    8. Kausar Yasmeen & Mohd Zaini Abd Karim, 2014. "Impact of Interaction Term between Education and Loan Size on Women’s Decision Making," Journal of Entrepreneurship and Business Innovation, Macrothink Institute, Journal of Entrepreneurship and Business Innovation, vol. 1(1), pages 123-141, June.

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    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness

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