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An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans

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  • Paulson, Nicholas D.
  • Katchova, Ani L.
  • Lence, Sergio H

Abstract

Contracts serve as coordination mechanisms which allocate value, risk, and decision rights across buyers and sellers. The use of marketing contracts in agriculture, specifically for crop production, has been increasing over the past decade. This study investigates the determinants of agricultural marketing contract design employing data from the USDA's Agricultural Resource Management Survey. Models are estimated to analyze the association between producer and contractor characteristics, the decision to produce under contract, and the types of contract structures observed in practice, while controlling for the potential for endogenous matching between contracting parties. Results indicate that while certain producer characteristics are significantly associated with the decision to produce corn or soybeans under contract, there is no significant association between those characteristics and specific contract attributes.

Suggested Citation

  • Paulson, Nicholas D. & Katchova, Ani L. & Lence, Sergio H, 2010. "An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans," ISU General Staff Papers 201001010800001035, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201001010800001035
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    Cited by:

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    2. Vassalos, Michael & Li, Yingbo, 2016. "Assessing the Impact of Fresh Vegetable Growers’ Risk Aversion Levels and Risk Preferences on the Probability of Adopting Marketing Contracts: A Bayesian Approach," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 19(1), pages 1-18, February.
    3. Frasa, Stefanie & Carlberg, Jared & Hogan, Robert, 2015. "Use of Contracts by Prairie Agricultural Producers," Working Papers 232328, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    4. Katchova, Ani L., 2013. "Agricultural Contracting and Agrifood Competition," Staff Papers 164515, University of Kentucky, Department of Agricultural Economics.
    5. Caroline Roussy & Aude Ridier & Karim Chaib & Marie Boyet, 2018. "Marketing contracts and risk management for cereal producers," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 616-630, June.
    6. Vassalos, Michael & Li, Yingbo, 2014. "Assessing the Impact of Fresh Vegetable Growers’ Risk Aversion Levels and Risk Perception on the Probability of Adopting Marketing Contracts: A Bayesian Approach," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170233, Agricultural and Applied Economics Association.
    7. Bignebat, C., 2018. "Learning process in marketing contract choice: the case of cereals in the Paris Basin," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277233, International Association of Agricultural Economists.
    8. Codjo, O.S. & Fiamohe, R. & Kpenavoun, S. & Acclassato, D. & Biaou, G., 2018. "Application of Portfolio and Stochastic Simulation Analysis for a Decision of Governance Structures Choice of Benin s Rice Producers," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277145, International Association of Agricultural Economists.
    9. Yang, Xi & Miao, Ruiqing & Khanna, Madhu, 2014. "Contracting in the Presence of Insurance: The Case of Bioenergy Crop Production," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170188, Agricultural and Applied Economics Association.
    10. Ma, Wanglin & Abdulai, Awudu, 2015. "Linking apple farmers to markets: Determinants and impacts of marketing contracts in China," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 202719, Agricultural and Applied Economics Association.
    11. Jensen, Kimberly L. & English, Burton C. & Clark, Christopher D. & Menard, R. Jamey, 2011. "Preferences for Marketing Arrangements by Potential Switchgrass Growers," Journal of Cooperatives, NCERA-210, vol. 25, pages 1-28.
    12. Roussy, Caroline & Rider, Aude & Chaib, Karim & Boyet, Marie, 2017. "Marketing Contracts and Risk Management for Cereal Producers," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261106, European Association of Agricultural Economists.

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    More about this item

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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