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Expected Utility Analysis of Stocker Cattle Ownership Versus Contract Grazing in the Southeast

Published online by Cambridge University Press:  28 April 2015

John D. Anderson ,
Curt Lacy ,
Charlie S. Forrest  and
Randall D. Little
John D. Anderson
Affiliation:
Department of Agricultural Economics, Mississippi State University, Starkville, MS
Curt Lacy
Affiliation:
Department of Agricultural and Applied Economics, University of Georgia, Tifton, GA
Charlie S. Forrest
Affiliation:
Department of Agricultural Economics, Mississippi State University, Starkville, MS
Randall D. Little
Affiliation:
Department of Agricultural Economics, Mississippi State University, Starkville, MS
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Abstract

Stocker cattle ownership is compared to contract grazing using stochastic simulation. Returns are evaluated for both cattle owners and caretakers in contract grazing agreements. For caretakers, contract grazing is significantly less risky than cattle ownership. Slightly to moderately risk-averse caretakers could be expected to prefer some type of contract grazing to direct ownership of cattle. For cattle owners, contracting reduces risk only slightly while significantly reducing expected returns.

Keywords

contractsexpected utilitygrazingstocker calvesQ0L1
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 36 , Issue 3 , December 2004 , pp. 719 - 730
Copyright
Copyright © Southern Agricultural Economics Association 2004

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