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Optimal Contracting for Cattle Feeding: An Assessment of Climatic Conditions

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  • Rahman, Shaikh Mahfuzur

Abstract

A unique approach using a biophysical growth model from the animal science literature is used to examine optimal contract cattle feeding behavior under alternative climatic conditions. The examination of incentives and outcomes in an unusually comprehensive contract parameter and behavioral space is made possible by combining simulated feedlot and carcass performance of a large set of cattle with public price and weather data. The model uniquely fits typical risk aversion levels and rationalizes existing contract types. The results show that optimal cattle feeding contract varies with climatic condition, but there is a tendency to replace cost-of-gain contracts with yardage-feed contracts as grid pricing has emerged.

Suggested Citation

  • Rahman, Shaikh Mahfuzur, 2010. "Optimal Contracting for Cattle Feeding: An Assessment of Climatic Conditions," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61451, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61451
    DOI: 10.22004/ag.econ.61451
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    References listed on IDEAS

    as
    1. Wayne D. Purcell & William T. Hudson, 2003. "Risk Sharing and Compensation Guides for Managers and Members of Vertical Beef Alliances," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 44-65.
    2. Wayne D. Purcell & William T. Hudson, 2003. "Risk Sharing and Compensation Guides for Managers and Members of Vertical Beef Alliances," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 44-65.
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    Industrial Organization;

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