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Agricultural Contracting Update: Contracts in 2008

43 Pages Posted: 21 Jul 2012  

James M. MacDonald

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Penni Korb

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: February 1, 2011

Abstract

Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2008, up from 36 percent in 2001, and a substantial increase over 28 percent in 1991 and 11 percent in 1969. However, aggregate contract use has stabilized in recent years and no longer suggests a strong trend. Contracts between farmers and their buyers are reached prior to harvest (or before the completion stage for livestock) and govern the terms under which products are transferred from the farm. Contracts are far more likely to be used on large farms than on small farms, and they form one element in a package of risk management tools available to farmers. Production contracts are used widely in livestock production, while marketing contracts are important to the production of many crops.

Keywords: Production contracts, marketing contracts, farm structure, farm size, farm income, contracting, Agricultural Resource Management Survey, ARMS, risk analysis

Suggested Citation

MacDonald, James M. and Korb, Penni, Agricultural Contracting Update: Contracts in 2008 (February 1, 2011). USDA-ERS Economic Information Bulletin No. 72. Available at SSRN: https://ssrn.com/abstract=2114442 or http://dx.doi.org/10.2139/ssrn.2114442

James M. MacDonald (Contact Author)

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5610 (Phone)

Penni Korb

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
(202) 694-5575 (Phone)

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