Contract and Exit Decisions in Finisher Hog Production
Economics, Center for Agricultural and Rural Development
Journal or Book Title
American Journal of Agricultural Economics
First Page or Article ID Number
Finisher hog production in North America has shifted toward larger units and contract format since 1990. Exit among independent growers has been high. We develop a model showing that growers with any of three efficiency attributes (lower innate hazard of exit, variable costs, or contract adoption costs) are more likely to contract, produce more, and expend more on business protection. Using 2004 Agricultural Resource Management Survey data, a recursive bivariate probit model confirms that contracting producers are less likely to exit. Specialization increases the probability of contracting. Education, nonfarm income, and older production facilities are significant in increasing expected exit.
D23, J26, J43, Q12
Dong, Fengxia; Hennessy, David A.; and Jensen, Helen H., "Contract and Exit Decisions in Finisher Hog Production" (2010). Economics Publications. 242.