IDEAS home Printed from https://ideas.repec.org/p/ags/ucamdp/31930.html
   My bibliography  Save this paper

Contract Marketing In The Us After The 2002 Farm Act: The Case Of Peanuts

Author

Listed:
  • Revoredo-Giha, Cesar
  • Nadolnyak, Denis A.
  • Fletcher, Stanley M.

Abstract

The elimination of the marketing quota system that regulated the peanut market since the 1930s has been accompanied by the emergence of marketing contracts between farmers and peanut buyers (mainly peanut shellers). Two types of contracts have been observed, forward contracts for delivery at harvest or at a later date and "option to purchase" contracts. We analyze the clauses of contracts used by major shellers in order to infer the motivation behind these contracts (i.e., risk sharing, reduction of transaction costs, improve coordination, exercise of market power, etc.). The analysis points out that the main role of the contracts is to replace the marketing structure existing prior the 2002 Farm Act, where peanut marketing was quite regulated. In this sense, the reduction of transaction costs associated to the need for coordinating a continuous supply of homogeneous quality seems to be the most plausible explanation.

Suggested Citation

  • Revoredo-Giha, Cesar & Nadolnyak, Denis A. & Fletcher, Stanley M., 2005. "Contract Marketing In The Us After The 2002 Farm Act: The Case Of Peanuts," Environmental Economy and Policy Research Discussion Papers 31930, University of Cambridge, Department of Land Economy.
    • Handle: RePEc:ags:ucamdp:31930
    DOI: 10.22004/ag.econ.31930
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/31930/files/dp050011.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.31930?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economic Reports 34081, United States Department of Agriculture, Economic Research Service.
    2. Tian Xia & Richard J. Sexton, 2004. "The Competitive Implications of Top-of-the-Market and Related Contract-Pricing Clauses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 124-138.
    3. Charles A. Holt & David T. Scheffman, 1987. "Facilitating Practices: The Effects of Advance Notice and Best-Price Policies," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 187-197, Summer.
    4. Michael Sykuta & Joseph Parcell, 2003. "Contract Structure and Design in Identity-Preserved Soybean Production," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(2), pages 332-350.
    5. MacDonald, James M. & Perry, Janet E. & Ahearn, Mary Clare & Banker, David E. & Chambers, William & Dimitri, Carolyn & Key, Nigel D. & Nelson, Kenneth E. & Southard, Leland W., 2004. "Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities," Agricultural Economic Reports 34013, United States Department of Agriculture, Economic Research Service.
    6. Love, H. Alan & Burton, Diana M., 1999. "A Strategic Rationale For Captive Supplies," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(1), pages 1-18, July.
    7. David E. Davis, 2000. "Does Top of the Market Pricing Facilitate Oligopsony Coordination?," SDSU Working Papers in Progress 12000, South Dakota State University, Department of Economics.
    8. Ian M. Sheldon, 1996. "Contracting, Imperfect Information, and the Food System," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 18(1), pages 7-19.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Revoredo-Giha, Cesar & Nadolnyak, Denis A. & Fletcher, Stanley M., 2005. "Contract Marketing after the 2002 Farm Act: The Case of Peanuts," 2005 Annual meeting, July 24-27, Providence, RI 19187, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Park, Moon-Soo & Love, H. Alan & Jin, Yanhong H., 2006. "Contract Pricing and Packer Competition in Fed Cattle Market," 2006 Annual meeting, July 23-26, Long Beach, CA 21356, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Aymeric Ricome & Arnaud Reynaud, 2022. "Marketing contract choices in agriculture: The role of price expectation and price risk management," Agricultural Economics, International Association of Agricultural Economists, vol. 53(1), pages 170-186, January.
    4. MacDonald, James M. & Perry, Janet E. & Ahearn, Mary Clare & Banker, David E. & Chambers, William & Dimitri, Carolyn & Key, Nigel D. & Nelson, Kenneth E. & Southard, Leland W., 2004. "Contracts, Markets, and Prices: Organizing the Production and Use of Agricultural Commodities," Agricultural Economic Reports 34013, United States Department of Agriculture, Economic Research Service.
    5. 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.
    6. Raszap Skorbiansky, Sharon & Adjemian, Michael K. & Saitone, Tina L. & Sexton, Richard J., 2017. "Price Determination and Margin Volatility in Thinly Traded Commodity Markets: An Application to Major U.S. Field Crops," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258577, Agricultural and Applied Economics Association.
    7. Love, H. Alan & Capps, Oral, Jr. & Williams, Gary W., 2010. "Concentration In Beef Packing and Slaughter Cattle Pricing," Journal of Food Distribution Research, Food Distribution Research Society, vol. 41(3), pages 1-17, November.
    8. Zavelberg, Yvonne & Heckelei, Thomas & Wieck, Christine, 2016. "Entry deterring effects of contractual relations in the dairy processing sector," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 5(1), pages 1-16, April.
    9. Salas, Paula Cordero, 2012. "Does Contract Enforcement Limit the Distribution of Bargaining Power? An Experimental Study," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124503, Agricultural and Applied Economics Association.
    10. Adjemian, Michael & Brorsen, B. Wade & Hahn, William & Saitone, Tina L. & Sexton, Richard J., 2016. "Thinning Markets in U.S. Agriculture," Economic Information Bulletin 232928, United States Department of Agriculture, Economic Research Service.
    11. Xia, Tian & Sexton, Richard J., 2002. "Can Food Processors Use Contracts To Influence Farm Cash Prices? The Competitive Implications Of Top-Of-The-Market And Related Pricing Clauses," 2002 Annual meeting, July 28-31, Long Beach, CA 19776, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Mohammad Rondhi & Ebban Bagus Kuntadi & Anik Suwandari & Rizky Yanuarti & Ahmad Fatikhul Khasan & Yasuhiro Mori & Takumi Kondo, 2023. "Impact of Contract Farming on the Technical Efficiency of Broiler Farmers in Indonesia," Economia agro-alimentare, FrancoAngeli Editore, vol. 25(1), pages 35-55.
    13. Rokhania & Rondhi, Mohammad & Kuntadi, Ebban Bagus & Suwandari, Anik & Yanuarti, Rizky & Khasan, Ahmad Fatikhul & Mori, Yasuhiro & Kondoca, Takumi, 2023. "Impact of Contract Farming on the Technical Efficiency of Broiler Farmers in Indonesia," Economia agro-alimentare / Food Economy, Italian Society of Agri-food Economics/Società Italiana di Economia Agro-Alimentare (SIEA), vol. 25(1), April.
    14. Blank, Steven C. & Volpe, Richard J. III & Erickson, Kenneth W., 2008. "The relationship between industry structure and production contracting: raising questions at the beginning of a trend," 2008 Annual Meeting, June 23-24, 2008, Big Sky, Montana 291743, Western Agricultural Economics Association.
    15. Felicetta Carillo & Francesco Caracciolo & Luigi Cembalo, 2017. "Do durum wheat producers benefit of vertical coordination?," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 5(1), pages 1-13, December.
    16. Katchova, Ani L., 2013. "Agricultural Contracting and Agrifood Competition," Staff Papers 164515, University of Kentucky, Department of Agricultural Economics.
    17. Nadolnyak, Denis A. & Fletcher, Stanley M. & Revoredo-Giha, Cesar, 2005. "Can Rank-Order Tournaments Improve Efficiency of Quality Differentiated Crop Markets Under Marketing Loan Program Operation? The Case of U.S. Peanuts," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24703, European Association of Agricultural Economists.
    18. Hueth, Brent & Ligon, Ethan & Dimitri, Carolyn, 2007. "AJAE Appendix: Agricultural Contracts: Data and Research Needs," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(5), pages 1-7, December.
    19. Roussy, Caroline & Rider, Aude & Chaib, Karim & Boyet, Marie, 2017. "Marketing Contracts and Risk Management for Cereal Producers," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261106, European Association of Agricultural Economists.
    20. d'Aspremont, Claude & Dos Santos Ferreira, Rodolphe & Gerard-Varet, Louis-Andre, 1997. "General Equilibrium Concepts under Imperfect Competition: A Cournotian Approach," Journal of Economic Theory, Elsevier, vol. 73(1), pages 199-230, March.

    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:ucamdp:31930. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

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

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.