FEEDER-PIG PRODUCERS AND FINISHERS - WHO SHOULD CONTRACT

The purpose of this study is to determine the minimum level of contrac t payments required to produce hogs under a production contract. Requi red payments needed for contract growing to be preferred to independen t production for the average-profit, slightly risk-averse, feeder-pig producer and for the high-profit, moderately to strongly risk-averse, feeder-pig producer are found to be similar to those currently offered by contractors. Feeder-pig finishers with average profit levels would either have to be strongly risk-averse or expect economic profits to fall to zero to prefer contracting over independent production. Low-pr ofit feeder-pig finishers who are moderately to strongly risk-averse w ould prefer contracting. Feeder-pig finishers who historically have ex perienced above-average profits would require payments substantially a bove current contract rates to prefer contracting.