@article{Katchova:164515,
      recid = {164515},
      author = {Katchova, Ani L.},
      title = {Agricultural Contracting and Agrifood Competition},
      address = {2013},
      number = {1639-2016-135152},
      series = {University of Kentucky Ag Econ Staff Papers},
      pages = {20},
      year = {2013},
      abstract = {The industrialization of agriculture is associated with  tighter supply chains where vertical coordination between  farmers and processors is facilitated by the use of  agricultural contracts. An overview is provided on the  recent trends in the use and structure of agricultural  contracts followed by an examination of how the competition  among processors may affect agricultural contracts. Many  reasons exist for using agricultural contracts, including  improved risk management and reduced transaction cost. On  the other hand, the growing use of agricultural contracts  and processor concentration raises concerns that processors  may exercise market power, for example by offering lower  contract prices in absence of local competition. Previous  studies using the new empirical industrial organization  models show that processing industries are not perfectly  competitive but the price distortions are very small. The  focus here is on examining price competition from a  farmer’s instead of an industry’s point of view. Recent  studies using farm-level data that show that the absence of  other contractors or spot markets in producers’ areas does  not lead to statistically significant price differences in  agricultural contracts for most commodities. These findings  provide evidence that most agricultural processors do not  exercise market power by reducing prices when other local  buyers are not available. Therefore, the recent trends of  industrialization and increased vertical coordination in  agriculture are likely occurring for reasons other than  processors exercising market power.},
      url = {http://ageconsearch.umn.edu/record/164515},
      doi = {https://doi.org/10.22004/ag.econ.164515},
}