Agriculture Reference
In-Depth Information
Table 5.4
Input and output sharing: Percentage of cropshare contracts for which input share equals output share
(q
=
s)
,or
equals 100 percent
(q
=
1
)
s
=
50%
s
=
60%
s
=
67%
Input
q
=
50%
q
=
100%
Both
q
=
60%
q
=
100%
Both
q
=
67%
q
=
100%
Both
FERTILIZER
92%
1%
93%
94%
1%
95%
83%
13%
96%
HERBICIDE
92
3
95
81
16
97
57
38
95
INSECTICIDE
92
3
95
83
13
96
57
39
96
SEED
80
16
96
11
85
96
8
90
98
HARVESTING
30
66
96
6
93
99
7
93
100
CHEMICAL
APPLICATION
48
47
95
41
57
98
39
58
97
DRYING
86
10
96
77
18
95
58
39
97
ENERGY
92
5
97
60
32
92
34
51
85
Percentage of cropshare contracts for which output share (
s
) equals input shares (
q
) when inputs are shared
Input
q
=
50%
q
=
60%
q
=
67%
CHEMICAL
APPLICATION
91%
94%
90%
DRYING
94
95
96
FERTILIZER
90
95
90
HARVESTING
90
92
96
HERBlClDE
93
96
93
ENERGY
87
96
89
INSECTICIDE
93
96
93
SEED
95
96
84
percent of all input-share policies. The only exception is energy costs, for which these rules
combine for 85 percent of the policies.
In addition, for contracts with input shares of 50 percent, 60 percent, and 67 percent, the
bottom section of table 5.4 shows the percentage of contracts for which the output share is
the same as the input share. For example, for cropshare contracts that require the farmer to
bear 50 percent of the costs of chemical application (row 1), 91 percent also have an output
share of 50 percent. The evidence presented offers strong support for our prediction that
either input costs will be shared by the farmer and landowner in the same proportion as
output or the farmer will bear all costs. This dichotomy refutes the implications of a model
that relies on interlinkage of inputs by manipulating input prices (Braverman and Stiglitz
1982). Furthermore, this evidence refutes the prediction that output shares always equal
input shares. Finally, our explicit consideration of contract enforcement costs—here, input
measurement costs—neatly explains the dichotomy in contract structure.
