Agricultural Contracting Update, 2005
By James M. MacDonald and Penni Korb
Economic Information Bulletin No. (EIB-35) 37 pp,
April 2008
More than half of all transactions for U.S. agricultural products are still conducted
through spot market exchanges, in which commodities are bought and sold in open
market transactions for immediate delivery. But a growing share of U.S. farm production
is produced and sold under agricultural contracts. Such contracts between farmers and
their buyers are reached prior to harvest (or before the completion stage for livestock)
and govern the terms under which products are transferred from the farm. The shift of
production to contracting coincides with shifts of production to larger farms. Contracts
are far more likely to be used on large farms than on small ones. Marketing and production
contracts covered 41 percent of the value of U.S. agricultural production in 2005, up
from 39 percent in 2003, 36 percent in 2001, and a substantial increase over 28 percent in
1991 and 11 percent in 1969.
Keywords: Production contracts, marketing contracts, farm structure, farm size, contracting, Agricultural Resource Management Survey, ARMS, risk analysis ERS, USDA
In this report ... Chapters are
in Adobe Acrobat PDF format.
- Abstract, Contents, and Summary, 1.070 kb.
- Introduction, 45 kb.
- Why Use Contracts?, 51 kb.
- Data on Contracting, 44 kb.
- The Continued Expansion of Contracting, 126 kb.
- The Use of Contracts in Selected Major Commodities, 139 kb.
- Conclusions, 43 kb.
- References, 67 kb.
- Appendix table, 69 kb.
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Updated date: April 1, 2008
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