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An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans

  • Paulson, Nicholas D.
  • Katchova, Ani
  • Lence, Sergio H.

Contracts serve as coordination mechanisms which allocate value, risk, and decision rightsacross buyers and sellers. The use of marketing contracts in agriculture, specifically for crop production,has been increasing over the past decade. This study investigates the determinants ofagricultural marketing contract design employing data from the USDA’s Agricultural ResourceManagement Survey. Models are estimated to analyze the association between producer and contractorcharacteristics, the decision to produce under contract, and the types of contract structuresobserved in practice, while controlling for the potential for endogenous matching betweencontracting parties. Results indicate that while certain producer characteristics are significantlyassociated with the decision to produce corn or soybeans under contract, there is no significantassociation between those characteristics and specific contract attributes.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 31525.

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Date of creation: 21 May 2010
Date of revision:
Publication status: Published in Journal of Agricultural & Food Industrial Organization, May 2010, vol. 8 no. 1, pp. 1-25
Handle: RePEc:isu:genres:31525
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Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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  1. Iain Fraser, 2005. "Microeconometric analysis of wine grape supply contracts in Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(1), pages 23-46, 03.
  2. Hueth, Brent & Ligon, Ethan, 1999. "Producer Price Risk and Quality Measurement," Staff General Research Papers Archive 5037, Iowa State University, Department of Economics.
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  7. Ackerberg, D.A. & Botticini, M., 1999. "Endogenous Matching and the Empirical Determinants of Contract Form," Papers 96, Boston University - Department of Economics.
  8. Lockheed, Marlaine E & Jamison, Dean T & Lau, Lawrence J, 1980. "Farmer Education and Farm Efficiency: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 29(1), pages 37-76, October.
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  10. 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.
  11. Keita Fukunaga & Wallace E. Huffman, 2009. "The Role of Risk and Transaction Costs in Contract Design: Evidence from Farmland Lease Contracts in U.S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 237-249.
  12. Theofanis Tsoulouhas & Tomislav Vukina, 1999. "Integrator Contracts with Many Agents and Bankruptcy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 61-74.
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  14. Harvey S. James Jr. & Michael E. Sykuta, 2006. "Farmer trust in producer- and investor-owned firms: Evidence from Missouri corn and soybean producers," Agribusiness, John Wiley & Sons, Ltd., vol. 22(1), pages 135-153.
  15. Coble, Keith H. & Heifner, Richard G. & Zuniga, Manuel, 2000. "Implications Of Crop Yield And Revenue Insurance For Producer Hedging," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(02), December.
  16. Michael E. Sykuta & Michael L. Cook, 2001. "A New Institutional Economics Approach to Contracts and Cooperatives," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(5), pages 1273-1279.
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