Evaluation of Pork Production Contracts

Pork production occurs under numerous forms of organizational structures ranging from sole proprietorship, where one individual provides the necessary capital and bears all risks, to those where multiple individuals and/or entities pool resources such as labor, capital, and management and risk sharing. One organizational method which has received an increased focus in recent years is contracting. Contract production is an arrangement which blends the various production resources and parties and spells out the division of responsibilities for supplying those resources (i.e., capital, labor, management). To effectively evaluate contract production arrangements it is necessary to compare the responsibilities and resources provided by each party with the respective expected returns