IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Endogenous Matching and Contractual Choice between Agricultural Processors and Farmers in China

Listed author(s):
  • Abler, David G.
  • Yu, Xiaohua
  • Chen, Danhong

Contracts are widely used by agricultural processors for purchasing inputs not only in developed countries but also in developing countries such as China. The total number of formal, written contracts between farmers and food processors is increasing rapidly in China, and the formal contracts that exist are becoming more complex. Contractual design in China is evolving from simple price-quantity contracts toward more complicated arrangements known as cooperation contracts or joint-stock cooperation contracts, designed to share risk and mitigate opportunistic behaviors by the contracting parties. Due to small farm sizes, the contracted amount in the typical contract in China is very small compared with Western countries, and each processor usually has a large number of contracted farmers. This paper uses data from a 2003 survey of food processing firms by the Chinese Ministry of Agriculture to analyze the determinants of contractual choices between these firms and farmers and the number of farmers that each firm contracts with. An important issue identified in the literature in analyzing the determinants of contractual choices is endogenous matching between parties to a contract and the effects of this endogenous matching on contract choice. We find strong evidence to support endogenous matching. In particular, our results indicate that firms which contract with a larger number of farms are more likely to use cooperation contracts than relational contracts.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by Agricultural and Applied Economics Association in its series 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania with number 103805.

in new window

Date of creation: Jul 2011
Handle: RePEc:ags:aaea11:103805
Contact details of provider: Postal:
555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202

Phone: (414) 918-3190
Fax: (414) 276-3349
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ags:aaea11:103805. 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)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.