Quality Premiums and the Post-Harvest Spot Market Thinness: The Case of U.S. Peanuts
Denis A. Nadolnyak and
Stanley M. Fletcher
No 25274, 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia from International Association of Agricultural Economists
In the paper, we analyze two issues that are important in the U.S. peanut markets: the absence of explicit quality premiums in the crop contracts, and the thinness of the postharvest cash/spot markets, which obstructs the operation of current production support policies. We argue that introduction of quality differentials in the form of either fixed premium or rank-order tournament contracts may kill two birds with one stone by increasing the spot market turnover and providing incentives for increasing crop quality. In addition, this arrangement is likely to reduce the costs of the federal support programs.
Keywords: Marketing (search for similar items in EconPapers)
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