Contractual Integration in Agriculture: Is There a Bright Side for Agriculture of the Middle?
Contractual Integration in Agriculture: Is There a Bright Side for Agriculture of the Middle?
This chapter examines the factors responsible for agriculture contracting along with the evolution of contractual arrangements following the change in power relationships in the agricultural system. Its aim is to determine the impact of the agricultural contracts on the agriculture-of-the-middle farmers’ socioeconomic well-being. The reduction of transaction costs and uncertainty for parties involved in contract negotiation is possible if both parties negotiate a contract from a position of equal power. The Union Parish, Louisiana, poultry contracts case study, offering information on the issues causing a power relationship imbalance between growers and firms including debt, liquidity of assets, and mortgage time is also presented. The chapter furthermore explores the options for agriculture-of-the-middle farmers of maintaining power in undifferentiated commodities production.
Keywords: agriculture contracting, power relationships, farmers, mortgage, undifferentiated commodities
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