A comparison of risk and return for contract and independent hog finishing (1995)

Authors

J L. Parcell
Michael R. Langemeier

Keywords

Swine day, 1995; Kansas Agricultural Experiment Station contribution; no. 96-140-S; Report of progress (Kansas State University. Agricultural Experiment Station and Cooperative Extension Service); 746; Swine; Risk management; Contract hog production

Abstract

Risks associated with independent hog finishing have prompted producers to seek alternative production and marketing methods. A means of reducing risk has developed through contract hog finishing. Research results indicate that risk-neutral producers require contract base payments ranging from $11.25 to $14.00 per head. Strongly risk-averse producers require contract base payments ranging from $4.75 to $7.75 per head. The lower ends of the ranges are for a contract with performance incentives. The upper ends of the ranges are for a flat contract without performance incentives. Calculated required base payments are similar to those payments currently received by contract hog finishers.; Swine Day, Manhattan, KS, November 16, 1995

Recommended Citation

Parcell, J L. and Langemeier, Michael R. (1995) "A comparison of risk and return for contract and independent hog finishing (1995)," Kansas Agricultural Experiment Station Research Reports: Vol. 0: Iss. 10. https://doi.org/10.4148/2378-5977.6454