THE BENEFITS OF SHARE CONTRACTS: SOME EUROPEAN RESULTS

Johan Petersson and Hans Andersson

Journal of Agricultural Economics, 1996, vol. 47, issue 1‐4, 158-171

Abstract: Less restricted trade may enhance demand for efficient risk management practices. Risk sharing arrangements have traditionally served the purpose of managing risk in agriculture. In this paper the set of share contract allocations defining the contract curve between tenant and landlord are derived analytically. An empirical example is provided for specialised crop farms in the presence of price, yield and input cost risk. The analysis is extended to a principal‐agent model where the money metric value of an optimal share contract is examined for some European farms. The optimal share ratio is estimated to be 68–72 per cent. The money metric value of the contract amounts to 30–80 per cent of the fixed rental rate.

Date: 1996
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https://doi.org/10.1111/j.1477-9552.1996.tb00682.x

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