“Don't Count Your Chickens...”: Risk and Risk Shifting in the Broiler Industry

Abstract

Abstract The contracts used to reward growers of broiler chickens in the United States base pay on a grower's performance relative to other growers. From a panel of data covering seventy‐five growers over four years, we use simulation methods to measure the price and production risk shifted from growers to integrator companies by these contracts. We also decompose the risk in broiler production variability. We conclude that the bulk of the risk in our sample, which is primarily price risk, is shifted from growers through the use of production contracts.