Agricultural Contracting and the Scale of Production

Nigel Key

Agricultural and Resource Economics Review, 2004, vol. 33, issue 2, 17

Abstract: This study presents evidence that contracting is positively associated with the scale of production for six major U.S. agricultural commodities. Specifically, contract producers tend to operate at a larger scale than do independent producers, and the likelihood of an operation contracting increases with its scale. This relationship is strongest in the cattle and hog sectors, where it persists even among large commercial operations. Six theoretical explanations for the observed correlation between scale and contracting are proposed, including imperfect capital markets, contractor transaction costs, input leverage, grower risk aversion, asset specificity, and technological change. Information from five annual national surveys is used to examine the validity of three of the proposed mechanisms.

Keywords: Production; Economics (search for similar items in EconPapers)
Date: 2004
References: View complete reference list from CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
https://ageconsearch.umn.edu/record/31273/files/33020255.pdf (application/pdf)

Related works:
Journal Article: Agricultural Contracting and the Scale of Production (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:arerjl:31273

DOI: 10.22004/ag.econ.31273

Access Statistics for this article

More articles in Agricultural and Resource Economics Review from Northeastern Agricultural and Resource Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().