Cross-Commodity Perspective on Contracting: Evidenc e from Mississippi
their household income was derived from off-farm sources. Asset specificity (ASSETSP)
measures the percentage of total farm assets that can be used in the production of only one
product. Respondents reported that an average 41.06% of assets were of this type.
A primary variable of interest was the respondent involvement in contracting. A
pro ducer was considered to engage in contract production if that producer sold a crop on
cash forward contracts or through a pool, or was engaged in production under a resource
providing or production management contract. On average, 14% of the respondents reported
being engaged in contract production under that definition (CONTRACT1). However, one
could argue that inclusion of marketing pools in a definition of contracting is questionable
because: (1) the marketing pool is just a simple extension of cash marketing that involves
joint marketing and (2) the motivations for participation in a pool may be different than
those for particpating in other forms of contracting. The CONTRACT2 variable reflects
the percentage of responding producers who participated in any other form of contracting
except marketing pools. As can be seen, this percentage is much smaller at 7.9%.
Little can be deduced from Table 3 about the effects of these variables on contracting
or the differences in these variables across commodities. The means of the relevant variables
were computed for different groups of commodities and these results are presented in Table
4. The first group only includes cotton producers. This group was i solated because of
its relative importance to Mississippi. The “Field Crops” group includes all corn, soyb ean,
rice, wheat and sorgum respondents. The “FNVO” group includes all fruit, nut, vegetable
and ornamental horticultural producers. The “Livestock” group includes all cattle, hogs,
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