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A General Equilibrium Theory of Contracts in Community Supported Agriculture

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  • Thomas W. Sproul
  • Jaclyn D. Kropp

Abstract

Community Supported Agriculture (CSA) contracts allow consumers to buy claims on a farm's future production. In turn, the consumer provides working capital to the farm during the growing season. CSA contracts also provide risk management for farmers with limited access to Federal crop insurance by transferring part of the farm's risk to the consumer. We derive a theory of CSA contract pricing for the two most prevalent types of CSA contracts: yield contracts, in which consumers receive a percentage of the farm's production, and weight contracts, in which consumers receive fixed quantities. We develop a two-period model in which expected utility maximizing producers and consumers engage in CSA contracting in the first period based on anticipation of yields and spot prices in the second period. Using the model, we generate several testable hypotheses to be explored in future research. Additionally, we present an overview of the data necessary to test the propositions and potential challenges that might arise in related empirical work.

Suggested Citation

  • Thomas W. Sproul & Jaclyn D. Kropp, 2015. "A General Equilibrium Theory of Contracts in Community Supported Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(5), pages 1345-1359.
    • Handle: RePEc:oup:ajagec:v:97:y:2015:i:5:p:1345-1359.
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    File URL: http://hdl.handle.net/10.1093/ajae/aav029
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    Citations

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    Cited by:

    1. Vassalos, Michael & Gao, Zhifeng & Zhang, Lisha, 2016. "Who are the CSA Consumers and how to Promote CSA to more Consumers?," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235872, Agricultural and Applied Economics Association.
    2. Si Tan & Weiping Chen, 2019. "Can members’ WeChat engagement affect relational outcomes in community‐supported agriculture? Empirical evidence from China," Agribusiness, John Wiley & Sons, Ltd., vol. 35(1), pages 36-52, January.
    3. Zhao, Zhe & Wang, Pei & Chen, Jiancheng & Zhang, Fan, 2021. "Economic spillover effect of grass-based livestock husbandry on agricultural production—A case study in Hulun Buir, China," Technological Forecasting and Social Change, Elsevier, vol. 168(C).
    4. Zhou, Y., 2018. "Assessing the Market Premium for Organic Certification among Canadian Community Supported Agriculture Programs," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275901, International Association of Agricultural Economists.
    5. Michael Vassalos & Zhifeng Gao & Lisha Zhang, 2017. "Factors Affecting Current and Future CSA Participation," Sustainability, MDPI, vol. 9(3), pages 1-16, March.
    6. Zvonimira Šverko Grdić & Helena Traub, 2016. "Community supported agriculture groups as a form of sustainable entrepreneurship," Tourism and Hospitality Industry 35, University of Rijeka, Faculty of Tourism and Hospitality Management.
    7. Antonella Samoggia & Chiara Perazzolo & Piroska Kocsis & Margherita Del Prete, 2019. "Community Supported Agriculture Farmers’ Perceptions of Management Benefits and Drawbacks," Sustainability, MDPI, vol. 11(12), pages 1-21, June.
    8. Wellner, Marie & Theuvsen, Ludwig, 2016. "Community Supported Agriculture Als Neuer Impuls Für Die Regionalvermarktung? Stand Der Forschung Und Abgrenzung Von Anderen Alternativen Lebensmittelnetzwerken," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244757, German Association of Agricultural Economists (GEWISOLA).
    9. Xu Hartling, 2020. "The Contribution Of Farm Stand, Farmers Market, And Community Supported Agriculture To The Community And Environment," Economy & Business Journal, International Scientific Publications, Bulgaria, vol. 14(1), pages 316-328.
    10. Bernard, Kévin & Bonein, Aurélie & Bougherara, Douadia, 2016. "Community Supported Agriculture and Preferences for Risk and Fairness," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 234904, Agricultural and Applied Economics Association.

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