Expected Utility Analysis of Stocker Cattle Ownership vs. Contract Grazing in the Southeast

John D. Anderson (), Curt Lacy, Charlie S. Forrest and Randall D. Little

Journal of Agricultural & Applied Economics, 2004, vol. 36, issue 3, pages 719-730

Abstract: Stocker cattle ownership is compared to contract grazing using stochastic simulation. Returns are evaluated for both cattle owners and caretakers in contract grazing agreements. For caretakers, contract grazing is significantly less risky than cattle ownership. Slightly to moderately risk-averse caretakers could be expected to prefer some type of contract grazing to direct ownership of cattle. For cattle owners, contracting reduces risk only slightly while significantly reducing expected returns.

Keywords: contracts; expected utility; grazing; stocker calves (search for similar items in EconPapers)
JEL-codes: Q0 L1 (search for similar items in EconPapers)

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Journal of Agricultural & Applied Economics is edited by Jeffrey M. Gillespie

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