Way back when, popcorn growers were about the only farmers with whom ASCS dealt who had production contracts. There was an issue there: our definition of "producer", as in the person who was eligible for farm program payments, always required that the person share in the risk of producing the crop... But some production contracts could lessen the risk, thus raising the question of whether they should still be eligible.
If I remember correctly, we tried to write the regulations to exclude producers with production contracts, but the popcorn people had the clout to get Congress (or a key Congressman or two) to lean on USDA and get the regulation reversed. (This sort of thing is what will happen after the Dodd-Frank financial regulation bill gets enacted and the regulation writers get down to their work. That's when it pays to have a Congressperson in your pocket to apply a bit of pressure below the surface, where the media won't notice.)
This meditation is spurred by a farmgate article, showing the rapid increase in production contracts: " contract production has been growing, all the way from 11% of farm production in 1965 to 41% in 2005."
But the summary is also interesting: "Production contracts are being increasingly used to manage risk, however, when one tries to identify the commonality among farmers who use production contracts, it is difficult, if not impossible, to point to any given demographic, economic, or personality factor. Although the use of crop insurance would seem to have commonality with someone who wants to manage risk, that is not always the case, and many crop insurance users, do not go near production contracts."
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