Agricultural firms engage in contractual arrangements with various parties. The purpose of collaborative arrangements varies, as does the nature of the contracts. Contract forms may be ‘horizontal’ (e.g. contracts between farmers) or ‘vertical’ (e.g. contracts between farmers and processors). Examples of contract partners are other farmers, employees, processors, landlords and government agencies.
There is a considerable amount of literature analysing contracts and organizational structure in agriculture. In the seminal paper by Stiglitz (1974), the principal-agent problem is discussed in the context of sharecropping. Organisational structure in agriculture has also been analysed using transaction cost approaches (e.g. Allen and Lueck, 1998; 2002; Schmitt, 1991). A brief review of contract theory and its applications to agriculture is provided in the following sections. There are a number of empirical studies that analyse the impact of farm organization on farm performance. For example, several authors compare farm productivity of family farms and corporate structures in the Central and East European Countries (i.e. Mathijs & Swinnen, 2001; Latruffe et. al, 2005).
However, little attention has been paid to aspects related to partnership arrangements between farmers in the form of, for example, machinery- and labour-sharing arrangements. These partnerships are often characterized by partial arrangements such joint ownership or mutual exchange of some machinery. With a few exceptions (e.g. Nielsen, 1999) and to the best of the author’s knowledge, gains attributable to such partnerships have not been analysed in the literature. Four of the five papers in this thesis focus on issues related to partnerships between farmers and aims to fill some gaps in the current state of knowledge.
Some 60-80% of Swedish farms are nowadays engaged in partnerships covering machinery and labour-sharing with other farms (Lantbruksbarometern, 2005; own survey, 2006). The partnership arrangements between farmers analysed in this thesis include machinery- and labour-sharing arrangements, contracts between specialized pig producers (vertically co-integrated production) and the case where a dairy farmer and a crop farmer ‘merge’ their farms. Some questions this thesis attempts to answer are: what is to be gained from partnership arrangements among farmers? How much can capital costs be reduced and/or what is the impact of partnerships on farm performance? Are there biological effects of collaborative arrangements that can improve the economic performance of an agricultural firm? For risk averse farmers, partnership arrangements may promote risk reduction in net income by risk sharing and diversification effects. Moreover, the risks associated with introducing new technologies can be shared among farmers.
Contents
1 Introduction,
2 A brief review of contract theory
- 2.1 Principal-agent theory,
2.2 Transaction cost theory,
2.3 A property rights approach,
3 Some literature on contracts in agriculture,
- 3.1 Contracts and organizational structure,
3.2 Summary of some empirical and theoretical literature,
4 Aspects of contracts considered,
5 Methodological approaches,
- 5.1 Mathematical programming, risk and utility functions,
5.2 Efficiency measurement using DEA,
6 Data,
- 6.1 Papers I and II,
6.2 Papers III, IV and V,
7 Results and findings,
- 7.1 Paper I,
7.2 Paper II,
7.3 Paper III,
7.4 Paper IV,
7.5 Paper V,
8 Concluding remarks,
- 8.1 Contribution of thesis,
8.2 Discussion and fields for future research,
References,
Acknowledgements,
Download
PDF Ebook Economic Consequences of Collaborative Arrangements in the Agricultural Firm
