Actual performance records of production contract farmers are used to assess the extent to which contract production reduces the risk borne by pork producers. Comparisons of contracting relative to independent market production reveal that farmers who enter into production contracts based on absolute performance measures reduce risks associated with variable income. Weak evidence is found that relative performance contracts, similar to those used in the broiler chicken industry, further reduce income variability. The effectiveness of such relative performance contracts will rely on several factors; among these are increased contract production and a more uniform pork production and processing system.

This paper examines a recently proposed per se rule to automatically treat as equity secured loans granted by shareholders to the corporation on the eve of insolvency. It shows that arguments based on the dual quality of the lender-shareholder are insufficient by themselves to propose such a rigid rule, which would curb potentially socially beneficial loans. Further empirical research is needed to shed light on this issue.