Production and marketing contracts play a significant part in the way Ag producers and buyers do business, but to what extent?  USDA's research economists James MacDonald said the contracts are very important.  He noted the contracts cover roughly 40% of all production in Ag.

 

“They are used less often in field crops,” MacDonald said.  “They cover maybe 20 percent of crop production whereas contracts cover somewhere around half of livestock production.”

 

MacDonald said roughly 8% of all farms nationwide use contracts, with most farm contracts connected to small family operations.

 

“There are occasionally striking changes as an industry as we are working on theses for one reason or another and those often involve substantial change in the use of contracts.”

 

Such as the expanding of contracting in hops and changes in the federal peanut and tobacco programs over the last two decades.

 

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