Increased reliance on contracting is one important feature of continuous structural change in U.S. agriculture, according to the Agricultural Contracting Update from USDA’s Economic Research Service. It’s also closely tied to other features of structural change, including shifts of production to larger farms.

Marketing and production contracts covered 39 percent of the value of U.S. agricultural production in 2003, up from 36 percent in 2001. This is a substantial increase over estimated values of 28 percent for 1991 and 11 percent in 1969.

The study notes that contracting is closely tied to farm size. Large farms (more than $1 million in sales) are more likely to contract than small farms (less than $250,000 in sales). Although use of both production and marketing contracts has grown over time, growth is more rapid for production contracts, especially for livestock operations.

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USDA’s Economic Research Service