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To Contract or Not to Contract? A Decision Theory and Portfolio Analysis of Cattle Contract Grazing

Published online by Cambridge University Press:  15 September 2016

Trent Teegerstrom ,
Gerard D’Souza ,
Phillip Osborne  and
Kezelee Jones
Trent Teegerstrom
Affiliation:
Univ. of Arizona
Gerard D’Souza
Affiliation:
Division of Resource Management
Phillip Osborne
Affiliation:
Division of Animal and Veterinary Sciences
Kezelee Jones
Affiliation:
West Virginia University, Morgantown
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Abstract

Contract grazing is compared with retained ownership of cattle using two frameworks—decision theory and portfolio analysis. The study area is West Virginia. Contracting is optimal under a wide range of price and weather scenarios and decision criteria. It also dominates other alternatives based on labor efficiency measures. The optimal portfolio consists of contract grazing and pasture rental, with the results insensitive to small changes in contract grazing returns. The decision theory and portfolio analyses are complementary; together, the two sets of results provide a comprehensive view of the optimal production alternative. Because different agents employ different decision criteria, this approach can increase the utility of results to decision makers and contribute to better decisions.

Type
Articles
Information
Agricultural and Resource Economics Review , Volume 26 , Issue 2 , October 1997 , pp. 205 - 215
Copyright
Copyright © 1997 Northeastern Agricultural and Resource Economics Association 

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