Agriculture Reference
In-Depth Information
23. These farms and their demise are described and discussed in detail in chapter 9. Drache (1964) gives the most
detailed history.
24. Our information comes from an examination of a set of land contracts for the Amenia and Sharon Land
Company, which operated in Cass County, North Dakota. We examined these contracts in the archives at the
North Dakota State University library.
25. Institute for Regional Studies, North Dakota State University, Archives of the Amenia and Sharon Land Co.
Mss 134/Box 27 “Farm Contracts”/Folders 1-4.
26. North Dakota did not gain statehood until 1889 (along with the surrounding states of South Dakota and
Montana) and immigration rates were high.
Chapter 4: Choosing between Cropshare and Cash Rent Contracts
1. The analysis in this chapter draws on Allen and Lueck (1992b).
2. Otsuka and Hayami (1988), found empirical work done only for the Third World, historical Europe, and the
postbellum South. There are surprisingly few empirical studies of modern Western agricultural contracts (Allen
and Lueck 1992a, 1992b, 1993a; Brown and Atkinson 1981; Canjels 1996; Sotomayer, Ellinger, and Barry 2000;
and Young and Burke 2001).
3. There are very few explanations of cropsharing based solely on risk sharing, and Cheung (1969) and Stiglitz
(1974) actually have elements of both transaction costs and risk aversion in their theories of share tenancy.
Interestingly, Cheung later focused on transaction costs and Stiglitz on risk. In addition, there are also the screening
theories of F. Allen (1985) and Hallagan (1978).
4. See, for example, Ackerberg and Botticini (2000), Carmona and Simpson (1999), Galassi (1992), and Hoffman
(1984).
5. This holds because of the optimal share conditions that are derived explicitly in chapter 5.
6. For studies that ignored risk-sharing see Alston, Datta, and Nugent (1984), Eswaran and Kotwal (1985), Lucas
(1979), and Reid (1977).
7. Schickele (1941) also noted the incentive to overuse the land in a short-term lease.
8. Hamilton (1990) notes these incentives too. He states: “Cash rental [can] provide an incentive for tenants to
maximize production...andthus may lead to heavier use or purchased inputs of fertilizer and chemicals” (242).
He also notes that cash rent contracts “may promote the planting of cash crop monocultures...rather than the
use of crop rotations” (242).
9. Eswaran and Kotwal (1985) also recognize this feature of cropsharing and write: “We view sharecropping as a
partnership in which both agents have incentives to self-monitor” (353).
10. We recognize that double moral hazard may be important for other types of farmland. Indeed, in chapter 8
we incorporate double moral hazard when considering contracting for equipment. Barzel (1997) uses a double
moral hazard framework to analyze farm contract choice, as do Carmona and Simpson (1999) in the context of
share contracts in Catalan viticulture. In retail franchise contracts double moral hazard is certainly important; see
Lafontaine (1992), Bhattacharyya and Lafontaine (1995), and Arru nada, Garicano, and Vazquez (2001).
11. This seemingly obvious cost of sharing is ignored by most writers, although three exceptions are Barzel (1997),
Lazear (1986), and Umbeck (1977).
12. There are some cases, however, in which a lessee's cattle are weighed at the beginning and the end of the
season, and the pasture owner is paid a share of the herd's weight gain. More common, though less so than straight
cash renting, is the case in which a landowner also owns cattle and leases them both to a rancher who retains a
share of the annual calf crop.
13. Since we assume it is prohibitive for the landowner to measure inputs by simply observing the output,
landowners are unable to entice optimal resource allocation using repeated contracts. Because the landowner
can only rely on the incentive structure of the contract, our one-period model is appropriate.
