Impact of Increasing Production or Marketing Contract Volume on Access to Competitive Markets

Marvin L. Hayenga, Neil E. Harl and John D. Lawrence

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: The Minnesota legislature requested a study of the use of production contracts in agriculture and the impacts on access to markets by independent farmers. The study objectives were expanded to also consider marketing contracts and broader performance implications of expanding use of contract linkages between farmers, processors and merchandisers in a rapidly consolidating industry. This report describes the extent and type of production and marketing contracts used in agriculture; reviews the theory and available evidence on the firm and industry level effects of contracting in agriculture; provides estimates (from Minnesota industry members) of increased contract volumes in selected sectors of Minnesota agriculture; and analyzes likely impacts of increased contract volumes on independent producers' market access and other aspects of industry performance. Finally, the pros and cons of some possible legislative or regulatory changes related to contracting in agriculture are briefly considered.

Date: 2000-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:10565

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