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Production Contracts and Farm Business Growth and Survival

Published online by Cambridge University Press:  26 January 2015

Nigel Key
Nigel Key*
Affiliation:
U.S. Department of Agriculture, Economic Research Service, Washington, DC
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Extract

Using farm-level panel data from the U.S. Census of Agriculture, this research examines whether hog producers with production contracts increased output more, or were more likely to survive in business over 5 years, compared with independent producers. Additionally, this research examines whether independent producers who adopted a production contract grew more than similar independent operations who did not contract. The local availability of contracts serves as an instrumental variable to address the potential endogeneity of the contracting decision. Results indicate that the use and adoption of production contracts affect farm size growth and survival differently depending on the initial size of an operation.

Keywords

production contractsfarm structurebusiness survivalinstrumental variableshog productionD23J43L25Q12
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 45 , Issue 2 , May 2013 , pp. 277 - 293
Copyright
Copyright © Southern Agricultural Economics Association 2013

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