Risk Sharing in Poultry Contracts
نویسنده
چکیده
In previous literature it was found that 84% of risk in poultry grow-out farms is transferred to the processing company, an integrator. A major reason for such a high risk transfer is the absence of a market price variable in determining compensation. We find that more recent contracts, which include a market price clause do not have such high risk transfer. Using welfare analysis we also conclude that the new contracts with market price clause are welfare improving for the growers. We attribute this to the fact that the growers are compensated for the additional risk they endure.
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