Skip to main content Accessibility help

Risk Preferences and Contracting In the U.S. Hog Industry

  • C. Scott Johnson (a1) and Kenneth A. Foster (a2)


Much of the increase use of vertical coordination in the U.S. swine industry has taken place through contract production. While the incidence of contracting is much higher in non-traditional hog production areas, a growing number of Midwestern producers are being faced with contract options. A variety of contractual arrangements are available through feed companies, integrators, genetics firms, and packers. However, little is known about the profitability and risk characteristics of these alternatives. This research suggests that risk neutral producers in the Midwest would prefer independent production, and risk averse producers would prefer to choose among the various types of coordination arrangements.



Hide All
Anderson, Jock R.Risk Efficiency in the Interpretation of Agricultural Production Research.Review of Marketing and Agricultural Economics. 42(1974) 131184.
Anderson, Jock R., Dillon, John L., and Brian Hardaker, J.. Agricultural Decision Analysis. Iowa State University Press, Ames Iowa. 1977.
Barry, Peter J.Risk Management in Agriculture. Iowa State University Press, Ames, Iowa. (1984).
Coase, R.The Nature of the Firm.Econometrica. 4(1937):386407.
Cochran, Mark J. and Raskin, Rob. “A User's Guide to the Generalized Stochastic Dominance Program for the IBM PC Version GSD 2.1.” University of Arkansas Department of Agricultural Economics and Rural Sociology Staff Paper SP0688. April, 1988.
Dillon, John L.The Analysis of Response in Crop and Livestock Production. 2nd ed. Pergamon Press, Oxford, U.K. 1977.
Dornbush, Calvin W. and Boehlje, Michael. “An Economic Analysis of Contracting Arrangements Used by the Minnesota Turkey Industry.” University of Minnesota Department of Agricultural and Applied Economics, Staff Paper P88-17. June, 1988.
Goh, Siew, Chao-Chuyan Shih, MarkCochran, J. and Raskin, Rob. “A Generalized Stochastic Dominance Program for the IBM PC.” S. J. Agr. Econ. 21 (1989): 175182.
Hamilton, Neil and Andrews, Greg. “State Regulation of Contract Feeding and Packer Integration in the Swine Industry.” White Paper 92-4, Agricultural Law Center, Drake University Law School, November 1992.
Hardaker, J. B. and Tanago, A. G.. “Assessment of the Output of a Stochastic Decision Model.Aust. J. Agr. Econ. 17(1973): 170178.
Jekanowski, Mark. “Value Based Marketing of Pork - An Evaluation of Current and Potential Systems.” M.S. Thesis, Department of Agricultural Economics, Purdue University, May 1993.
Kauffman, R. G., Drachenberg, E., Hermel, T., Hall, D., and Keough, W.. “Do Pork Packers Pay for Leanness?” Unpublished Report. University of Wisconsin, Madison, WI (1988).
Klemme, Richard M.A Stochastic Dominance Comparison of Reduced Tillage Systems in Corn and Soybean Production Under Risk.Amer. J. Agr. Econ. 67(1985):550557.
Kliebenstein, James and Hillburn, Chris. “Evaluation of Pork Production Contracts.” Iowa State University Department of Economics.
Kramer, Randall A. and Pope, Rulon D.. “Participation in Farm Commodity Programs: A Stochastic Dominance Analysis.Amer. J. Agri. Econ. 63(1981): 119128.
Lee, John, Brown, Deborah J., and Lovejoy, Stephen. “Stochastic Efficiency versus Mean-Variance Criteria as Predictors of Adoption of Reduced Tillage.Amer. J. Agi: Econ. 67(1985):839845.
McCarl, Bruce A.Generalized Stochastic Dominance: An Empirical Examination.S. J. Agr. Econ. 22(1990):4955.
Meyer, Jack. “Choice Among Distributions.J. Econ. Theory. 14(1977):326336.
Raskin, Rob and Cochran, Mark J.. “Interpretations and Transformations of Scale for the Arrow Pratt Absolute Risk Aversion Coefficient: Implications for Generalized Stochastic Dominance.W. J. Agr. Econ. 11(1986):204210.
Rasmussen, S.The Use of a Multi-Period LP-Model as the Core of a Decision Support System for a Hog Slaughterhouse,” Social Science Series Paper 3 from the Department of Economics and Natural Resources, Royal Veterinary and Agricultural University, Denmark, 1992.
Rhodes, V. James. “U.S. Contract Production of Hogs.” Univ. Missouri Agr. Econ. Report No: 1990-1. University of Missouri Agricultural Experiment Station, National Pork Producer's Council, and Pork 89. 1989.
Rubin, P.The Theory of the Firm and the Structure of the Franchise Contract.J Law and Econ. 21(1977):223233.
Sapp, S. and Knipe, C.L.. “Japanese Consumer Preferences for Processed Pork.Agribusiness, 6(1990):387400.
Schräder, L.Responses to Forces Shaping Agricultural Marketing: Contracts.Amer. J. Agr. Econ. 68(1986):161166.
Ueda, Y.Satisfying Our Biggest Pork Customer,” Pork Strategies 2000: A Marketing and Technology Dynamics Symposium for Pork Industiy Leaders, Des Moines, Iowa, December 1990.
Williams, Jeffrey R.A Stochastic Dominance Analysis of Tillage and Crop Insurance Practices in a Semiarid Region.Amer. J. Agr. Econ. 70(1988):! 12120.
Williamson, Oliver E.The Vertical Integration of Production: Market Failure Considerations.Amer. Econ. Rev. 61 (1971): 112123.
Williamson, Oliver E.Transaction Cost Economics: The Governance of Contractual Relations.J. Law and Econ. 22(1979):233261.
Wilson, Paul N. and Eidman, Vernon R.. “An Empirical Test of the Interval Approach for Estimating Risk Preferences.W. J. Agr. Econ. 8( 1983): 170182.
Kelley, Zering, and Beals, Allen. “Financial Characteristics of Swine Production Contracts.J. Amer. Soc. Farm Managers and Rur. Appraisers. 54(1990):4353.


Risk Preferences and Contracting In the U.S. Hog Industry

  • C. Scott Johnson (a1) and Kenneth A. Foster (a2)


Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed