Price Risk Management In Hog Production Through The Vertical Coordination Theoretical And Practical Approach
Vertical coordination is a form of price risk management which mitigates the negative effects of hog cycle, associated with price and supply fluctuations on the pig market and is aims to stabilize farm incomes. It can take the form of contracts or full vertical integration, however the level of farmers commitment results from the estimated production risk and ability to fulfill agreements provisions. The aim of this paper is to identify the nature and effects of price risk management in hog production through the vertical integration. The authors argue that the properly coordinated production process can reduce the risk of price and production volatility and helps to stabilize farms income. It may also be beneficial to the environment and local community, strengthening the vitality of rural communities. It seems that this solution may become a dynamic trend in modern food system in developed countries.
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- Martinez, Stephen W., 2002. "Vertical Coordination Of Marketing Systems: Lessons From The Poultry, Egg, And Pork Industries," Agricultural Economics Reports 34051, United States Department of Agriculture, Economic Research Service.
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