Some 63 percent of U.S. hogs are raised under contract to a processor, nearly double the 34 percent that were sold under contract 20 years ago, said the USDA. Ninety percent of poultry and eggs are produced under contract. Tobacco and sugar beets also are in that range.
The so-called integration of farm production is one of the biggest issues among activists. One third of all U.S. crop and livestock output is produced under a contract, although only 8 percent of farms have contracts, according to USDA’s “America Diverse Family Farms” report. “The value of contract production was nearly equally split between marketing and production contracts in 2017,” said USDA. Production contracts are commonly used in livestock farms and spell out terms for a farmer to raise animals for their owner. Marketing contracts, which set a sale price for a specified quantity of a commodity, are common on crop farms.
“Tobacco has demonstrated the largest increase in share of production under contract, from less than 1 percent in 1996/97 to 90 percent in 2017,” said the report. “Cigarette manufacturers switched form cash auctions to contracts to ensure sufficient supply of the types of tobacco they need.”
Relatively small amounts of wheat, corn and soybeans, the three most widely grown crops, are grown under contract.
To read “America’s Diverse Family Farms 2018 Edition,” click here.