The Role of Farmers' Risk aversion for Contract Choice in the US Hog Industry
-
Xiaoyong Zheng
In this paper we estimate the farmers' side welfare effects of a hypothetical regulatory scenario that would partially eliminate production contracts in the hog industry. Using the Agricultural Resource Management Survey (ARMS) data for 2004, farmers' production costs under different marketing arrangements are estimated and then used to recover their individual risk aversion parameters with the help of a structural expected profit maximization model. The results show that farmers who use production contracts are more risk averse than farmers who use spot markets or marketing contracts. The regulation that forces producers to market their hogs in a riskier marketing channel relative to the channel they themselves selected imposes large welfare losses on the affected farmers.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Articles in the same Issue
- Article
- Demand and Pricing in the U.S. Margarine Industry
- Understanding Consumer Interest in Organics: Production Values vs. Purchasing Behavior
- Estimating the Welfare Loss to Consumers When Food Labels Do Not Adequately Inform: An Application to Fair Trade Certification
- The Role of Farmers' Risk aversion for Contract Choice in the US Hog Industry
- Private Labeling and Competition between Retailers
- Consumer Preferences for Detailed versus Summary Formats of Nutrition Information on Grocery Store Shelf Labels
- Further Results on Asymmetry in Farm-Retail Price Transmission under Spatial Monopoly
- Search Costs in Identity-Preserved Agricultural Markets
- Paying for Shelf Space: An Investigation of Merchandising Allowances in the Grocery Industry
- Agricultural Production Clubs: Viability and Welfare Implications
Articles in the same Issue
- Article
- Demand and Pricing in the U.S. Margarine Industry
- Understanding Consumer Interest in Organics: Production Values vs. Purchasing Behavior
- Estimating the Welfare Loss to Consumers When Food Labels Do Not Adequately Inform: An Application to Fair Trade Certification
- The Role of Farmers' Risk aversion for Contract Choice in the US Hog Industry
- Private Labeling and Competition between Retailers
- Consumer Preferences for Detailed versus Summary Formats of Nutrition Information on Grocery Store Shelf Labels
- Further Results on Asymmetry in Farm-Retail Price Transmission under Spatial Monopoly
- Search Costs in Identity-Preserved Agricultural Markets
- Paying for Shelf Space: An Investigation of Merchandising Allowances in the Grocery Industry
- Agricultural Production Clubs: Viability and Welfare Implications
