[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ags/umdrwp/28549.html
   My bibliography  Save this paper

Optimal Incentive Structure in Cattle Feeding Contracts Under Alternative Fed Cattle Pricing Methods

Author

Listed:
  • Rahman, Shaikh Mahfuzur
Abstract
Developing a multitask principal-agent model, this paper theoretically analyzes the incentive provisions in the existing cattle feeding contracts under alternative fed cattle pricing methods. Comparative statics from the theoretical model are evaluated by simulation experiments. Feedlot and carcass performance of a large set of feeder steers are simulated employing a dynamic and deterministic bio-physical growth model adapted from the animal science literature. The cattle feeder and the owner's stochastic costs and returns under alternative production technologies and market conditions are then calculated by combining cattle performance data with historical price data. The main finding of this study is that the yardage fee contract is optimal for the cattle owner when the fed cattle are to be priced on the grid and the cost of gain contract is optimal when the cattle are to be marketed according to the live or dressed weight pricing methods.

Suggested Citation

  • Rahman, Shaikh Mahfuzur, 2006. "Optimal Incentive Structure in Cattle Feeding Contracts Under Alternative Fed Cattle Pricing Methods," Working Papers 28549, University of Maryland, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:umdrwp:28549
    DOI: 10.22004/ag.econ.28549
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/28549/files/wp060003.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.28549?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Tedeschi, Luis Orlindo & Fox, Danny G. & Guiroy, Pablo J., 2004. "A decision support system to improve individual cattle management. 1. A mechanistic, dynamic model for animal growth," Agricultural Systems, Elsevier, vol. 79(2), pages 171-204, February.
    2. Schroeder, Ted C. & Albright, Martin L. & Langemeier, Michael R. & Mintert, James R., 1993. "Determinants of Cattle Feeding Profit and Cost of Gain Variability," Staff Papers 118161, Kansas State University, Department of Agricultural Economics.
    3. Langemeier, Michael R. & Schroeder, Ted C. & Mintert, James R., 1992. "Determinants Of Cattle Finishing Profitability," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(2), pages 1-7, December.
    4. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    5. Mark, Darrell R. & Schroeder, Ted C. & Jones, Rodney D., 2000. "Identifying Economic Risk In Cattle Feeding," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(3), pages 1-14.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rahman, Shaikh Mahfuzur, 2006. "Optimal Incentive Structure in Cattle Feeding Contracts under Alternative Fed Cattle Pricing Methods," 2006 Annual meeting, July 23-26, Long Beach, CA 21404, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Maples, Joshua G. & Harri, Ardian & Riley, John Michael & Tack, Jesse B., 2013. "Marketing Margins and Input Price Uncertainty," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150604, Agricultural and Applied Economics Association.
    3. Tang, Minfeng & Lewis, Karen E. & Griffith, Andrew P. & Boyer, Christopher N., 2016. "Identifying Factors that Impact Returns to Retained Ownership of Cattle," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229766, Southern Agricultural Economics Association.
    4. Nicolás Acevedo Vélez, 2007. "The cattle crush strategy: trading opportunities for cattle producers," Revista Ecos de Economía, Universidad EAFIT, October.
    5. Forristall, Cody & May, Gary J. & Lawrence, John D., 2002. "Assessing The Cost Of Beef Quality," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19060, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
    6. Maré, F.A. & Willemse, B.J., 2011. "PR - Should Maize Farmers Consider A Long Term Feedlot In Response To Low Maize Prices: The Case Of The South African Market (p287-296)," 18th Congress, Methven, New Zealand, 2011 345582, International Farm Management Association.
    7. Belasco, Eric J. & Taylor, Mykel R. & Goodwin, Barry K. & Schroeder, Ted C., 2009. "Probabilistic Models of Yield, Price, and Revenue Risks for Fed Cattle Production," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 41(1), pages 1-15, April.
    8. Mark, Darrell R. & Schroeder, Ted C. & Jones, Rodney D., 2000. "Identifying Economic Risk In Cattle Feeding," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(3), pages 1-14.
    9. Jones, Rodney D. & Kastens, Terry L., 1999. "Predicting Feeding Cost Of Gain With More Precision," 1999 Annual meeting, August 8-11, Nashville, TN 21506, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. Maples, Joshua G. & Coatney, Kalyn T. & Riley, John M. & Karisch, Brandi B. & Parish, Jane A. & Vann, Rhonda C., 2015. "Comparing Carcass End-Point And Profit Maximization Decision Rules Using Dynamic Nonlinear Growth Functions," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 47(1), pages 1-25, February.
    11. Lewis, Karen & Griffith, Andrew & Boyer, Christopher & Rhinehart, Justin, 2015. "Returns to Retained Ownership through Finishing for Beef Cattle Originating from Tennessee," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196620, Southern Agricultural Economics Association.
    12. Mathews, Kenneth H., Jr. & Arnade, Carlos Anthony & Jones, Keithly G., 2008. "Derived Demand for Cattle Feeding Inputs," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 26(1), pages 1-20.
    13. Perry, William R. & Marsh, Thomas & Jones, Rodney & Sanderson, M.W. & Sargeant, J.M. & Griffin, D.D. & Smith, R.A., 2007. "Joint product management strategies for E. coli O157 and feedlot profits," Food Policy, Elsevier, vol. 32(5-6), pages 544-565.
    14. Braelyn Moltz & Mark Yu & Edward Osei & W. Brandon Smith & Brant Poe, 2019. "The Economic Analysis of Corn Grain Optimization and Price Variation for Cattle on Feed in Texas," Agriculture, MDPI, vol. 9(7), pages 1-12, July.
    15. Belasco, Eric J., 2008. "The Role of Price Risk Management in Mitigating Fed Cattle Profit Exposure," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(3), pages 1-17.
    16. Nathalie Greenan & Marc-Arthur Diaye & Patricia Crifo, 2004. "Pourquoi les entreprises évaluent-elles individuellement leurs salariés ?," Économie et Prévision, Programme National Persée, vol. 164(3), pages 27-55.
    17. Lin Wang & Feng Pan, 2023. "Incentive Mechanism Analysis of Environmental Governance Using Multitask Principal–Agent Model," Sustainability, MDPI, vol. 15(5), pages 1-17, February.
    18. Susan Feng Lu, 2012. "Multitasking, Information Disclosure, and Product Quality: Evidence from Nursing Homes," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 21(3), pages 673-705, September.
    19. Massimiliano Mazzanti & Francesco Nicolli & Dario Biolcati Rinaldi, 2012. "Multi-Tasking in the Waste Realm.Theoretical and Empirical Insights on Management and Disposal Performances," EuroEconomica, Danubius University of Galati, issue 5(31), pages 88-101, December.
    20. Eduardo Fernández-Arias & Ricardo Hausmann & Ugo Panizza, 2020. "Smart Development Banks," Journal of Industry, Competition and Trade, Springer, vol. 20(2), pages 395-420, June.

    More about this item

    Keywords

    Livestock Production/Industries;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:umdrwp:28549. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/daumdus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.