IDEAS home Printed from https://ideas.repec.org/p/ags/aaea08/6077.html
   My bibliography  Save this paper

Aligning Incentives for Accelerated Heifer Growth in Custom Heifer Growing Contracts

Author

Listed:
  • Olynk, Nicole J.
  • Wolf, Christopher A.

Abstract

Dairy managers today are faced with the decision to either raise their own replacements on the dairy farm or send heifers to a custom heifer grower. The largest potential challenge of contracting out the heifer raising enterprise revolves around the potential for a moral hazard problem because of hidden action on the part of the custom heifer grower. A principal-agent framework was used to elicit contract terms which provide incentives for the custom heifer grower to perform accelerated growth without heifers becoming over-conditioned. In order to provide incentives to custom growers, heifers returned to the dairy farm should be compared in performance to other heifers of similar age. We solve for the price paid per pound of gain, price paid for inch of wither height above the average heifer on the operation, deduction per unit of body condition score over or under ideal body condition score, and percent of the value of milk production above the average milk production by herd peers. Such comparisons are similar to tournament contracts, such as those used in raising poultry or swine.

Suggested Citation

  • Olynk, Nicole J. & Wolf, Christopher A., 2008. "Aligning Incentives for Accelerated Heifer Growth in Custom Heifer Growing Contracts," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6077, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  • Handle: RePEc:ags:aaea08:6077
    DOI: 10.22004/ag.econ.6077
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/6077/files/469455.pdf
    Download Restriction: no

    More about this item

    Keywords

    Livestock Production/Industries;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aaea08:6077. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search). General contact details of provider: http://edirc.repec.org/data/aaeaaea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.