Brent Hueth

Brent Hueth
University of Wisconsin–Madison | UW · Department of Agricultural and Applied Economics

Ph.D.

About

62
Publications
5,641
Reads
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924
Citations
Introduction
I'm interested in agricultural markets and policy, cooperative business organizations, and the role of agriculture in economic development. My research uses contract and industrial organization theories to measure market performance, and to evaluate the distributional implications of policy and market structure. I teach on economics and strategy in agricultural markets, and lead a center that provides education and applied research support to cooperative businesses.
Additional affiliations
January 2006 - present
University of Wisconsin–Madison
Position
  • Professor (Associate)
Education
August 1998
University of Maryland, College Park
Field of study
  • Agricultural and Natural Resource Economics
August 1989
University of Oregon
Field of study
  • Economics

Publications

Publications (62)
Article
When the threat of entry by followers includes cooperative firms, the maximum fixed cost that a profit maximizing leader can endure is endogenous. The aggressive strategy required for entry-deterrence curtails the leader’s expected profit and can discourage its initial entry. In such circumstances a cooperative firm may yet be viable, despite havin...
Article
We model the producer cooperative as a firm where a single class of individ-uals supplies an essential input and monitors managerial behavior. We show how this contractual structure reduces the incidence of equilibrium credit rationing, even assuming a cost disadvantage relative to a firm where these roles are specialized. Our model provides an exp...
Article
Brent Hueth focuses on useful new set of tools that researchers can use to study contracting and regulatory design in farm and food systems. Tools can improve identification in empirical models and provide new insight into efficient contract design across a wide range of applications. These applications include the determinants of choice between ca...
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The cases assembled in this special issue provide a rich setting for an examination of a number of cooperative conversion and restructurings that have occurred over the last 10 years. The cases also provide some lessons on the larger cooperative problems and questions in which cooperative researchers have been interested. The cases suggest that som...
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The West Liberty Foods turkey cooperative formed in 1996 to purchase the assets and assume operations of Louis Rich Foods. Based on field interviews with grower members and company management, we describe changes in the economic relationship between growers and the company that resulted from the purchase. We argue that many of the observed changes...
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We study regulatory design for a pollution-generating firm who is better informed than the regulator regarding pollution mitigation possibilities, and who chooses an unobservable action when employing a particular mitigation plan. We distinguish among performance, process, and design standards, and study the relative merit of each type of regulator...
Article
Cooperative owners have a transactional relationship - as customers or input suppliers - with their firm in addition to their investment relationship. This changes both the incentives and the information that owners have to monitor managerial performance. We argue that this difference reduces the need for cooperative CEOs to receive performance-bas...
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This study explores the ways in which information about other individual's action affects one's own behavior in a dictator game. The experimental design discriminates behaviorally between three possible effects of recipient's within-game reputation on the dictator's decision: Reputation causing indirect reciprocity, social influence, and identifica...
Article
We study business organization and coordination of specialty-market hog production using a comparative analysis of two Iowa firms marketing niche pork. We analyze each firm's management of five key organizational challenges: planning and logistics, quality assurance, process verification and management of “credence attributes,” business structure,...
Article
We develop a financial-contracting theory of the cooperative fim where production requires three generic tasks: working, managing, and monitoring. Workers provide an intermediate input (or labor directly); managers convert the workers' input into a final output; and directors monitor managers. We model the cooperative firm by letting the workers ac...
Article
Considering the agricultural contracts, a systematic data collection is believed that can help to build further knowledge and can support more specific research projects as need. There is no viable alternative for learning about the nature and importance of contracting in agriculture. However, collecting data from individual firms contracting parti...
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The material herein contained is supplementary to the article name in the title and published in the American Journal of Agricultural Economics, Volume 89, Number 5, December 2007.
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We study the incidence and economic rationale for cooperative bargaining in U.S. agricultural markets. Bargaining is not just about increasing price paid to farmers; indeed, there is no empirical research indicating that cooperative bargaining has any direct influence on price. Nevertheless, the price negotiation process may be useful in itself as...
Article
Live cattle are increasingly priced as an explicit function of U.S. Department of Agriculture yield and quality grades. Human graders visually inspect each slaughtered carcass and call grades in a matter of seconds as the carcass passes on a moving trolley. We examine whether there is systematic bias in grade calls using a sample of loads delivered...
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We study incentives for information sharing among agricultural intermediaries in imperfectly competitive markets for farm output. Information sharing always increases expected grower and total surplus, but may reduce expected intermediary profits. Even when expected profits increase with information sharing, intermediary firms face a prisoner's dil...
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In modern U.S. agriculture, a tenant typically contracts with more than one landlord, although most of the past literature has focused exclusively on bilateral contracts with a single tenant and a single landlord. We argue that, in the presence of contractual externalities under which the landlords do not cooperatively act, multilateral contracting...
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We study the optimal allocation of land and physical asset ownership between a farmer who works with land and assets directly, and an intermediary who sells the farmer’s output in some downstream market. The farmer can either work as an \employee" of the intermediary (intermediary owns the land and assets), or as an \independent producer" (farmer o...
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We study business organization and coordination of specialty-market hog production using a comparative analysis of two Iowa pork niche-marketing firms. We describe and analyze each firm's management of five key organizational challenges: planning and logistics, quality assurance, process verification and management of "credence attributes," busines...
Article
This paper examines contracts used in the North American sugarbeet industry. Though quite similar in many respects, the contracts we study vary across processing firms in the set of quality measures used to condition contract payments to growers. This is somewhat surprising, given the homogeneous nature of the processors' finished product (refined...
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The West Liberty Foods turkey cooperative was formed in 1996 to purchase the assets and assume operations of Louis Rich Foods (an investor-owned processing firm), which, at the time, announced the imminent shutdown of its West Liberty, Iowa, processing facility. We study the creation and performance of this "new generation" cooperative using field...
Article
Cooperative formation in agriculture sometimes occurs in response to the exit of a private firm and typically requires substantial equity investment by participating farmers. What economic rationale can explain why farmers are willing to contribute capital to an activity that fails to attract non-farm, "private" investment? We hypothesize that doin...
Article
This paper examines contracts used in the North American sugarbeet industry. Though quite similar in many respects, the contracts we study vary across processing firms in the set of quality measures used to condition contract payments to growers. This is somewhat surprising, given the homogeneous nature of the processors' finished product (refined...
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Full-text available
Participants in U.S. markets for live cattle increasingly rely on federal grading standards to price slaughtered animals. This change is due to the growing prominence of "grid" pricing mechanisms that specify explicit premiums and discounts contingent on an animal's graded quality class. Although there have been recent changes in the way cattle are...
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State-wide economic impacts of non-predator vertebrate pest damage were estimated for all pests causing damage in 19 California commodities. Average field-level damage estimates and vertebrate control costs were collected for each commodity, and across six production regions. Economic impacts were estimated by comparing simulated market outcomes in...
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The declining share of beef in total U.S. meat consumption has motivated industry-wide efforts to improve average beef quality through more effective coordination among the various market participants. Increased use of explicit grid pricing mechanisms over the last decade represents initial efforts at improved coordination. More recent efforts incl...
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This paper uses extensive data on production outcomes for processing tomato growers in California to examine the efficacy of explicit incentives observed in grower-processor contracts. Our data include all deliveries of tomatoes to some 51 processors over a period of 7 years in which at least 65 unique types of contracts are employed. Results indic...
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Why do countries� greenhouse gas (GHG) intensities differ? How much of a country�s GHG intensity is set by inflexible national circumstances, and how much may be altered by policy? These questions are common in climate change policy discourse and may influence emission reduction allocations. Despite the policy relevance of the discussion, little qu...
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We study incentives for information sharing (about uncertain future demand for final output) among agricultural intermediaries in imperfectly competitive markets for farm output. Information sharing always increases expected grower and consumer surplus, but may reduce expected intermediary profits. Even when expected intermediary profits increase w...
Article
Full-text available
The declining share of beef in total U.S. meat consumption has motivated industry-­wide efforts to improve average beef quality through more effective coordination among the various market participants. Increased use of explicit "grid" pricing mechanisms over the last decade represents initial efforts at improved coordination. More recent efforts...
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Full-text available
Risk-averse farmers in the produce industry grow a product whose market price is often quite unpredictable. Shippers or other intermediaries shield the farmer from much of this price risk; however, actual contracts between growers and shippers vary considerably across commodities in the residual price risk growers face. We hypothesize that imperfec...
Article
We examine the choice of efficient decision rules in a budget-balanced organization. The organization awards a scarce ``project'' to the organization member who values it most, and redistributes some surplus from the project among all remaining members. An auction-based allocation rule tends to generate majority support when the number of members i...
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Though farm-level risks, risk attitudes, and associated behavioral consequences have been extensively investigated by agricultural economists, comparatively little research has focused on why farmers face risk. It is evident that markets for agricultural production and price risk are generally incomplete. Even in commodities with well-developed mar...
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An agency model of contracts used in California's processing-tomato industry is estimated in three stages. We first estimate growers' stochastic production possibilities, and then, for a given vector of preference parameters, compute an optimal compensation schedule. Finally, we compare computed compensations with actual compensations and choose pr...
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This paper identifies market and commodity characteristics that seem to support successful cooperative bargaining in markets for farm output. Bargaining is not just about increasing prices paid to farmers; indeed, although there is very little empirical research that addresses the issue, what evidence does exist suggests that cooperative bargaining...
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Abstract In this paper we focus on mechanisms of coordination in agricultural contracts. Our approach is intended to advance understanding of social relations of production and distribution of power in agrofood systems. Through an analysis of contracts between farmers and intermediaries (e.g., processors, shippers, consignment agents) for Californi...
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Relative performance schemes such as tournaments are commonly used in markets for a variety of livestock and processing commodities, while explicit versions of these schemes are rarely used in markets for fresh fruits and vegetables and specialty grains. We show how contracts for these latter commodities do in fact provide relative performance ince...
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This paper estimates an agency model of contracts used in California's processing-tomato industry. Model estimation proceeds in three stages. We first estimate growers' stochastic production possibilities, and then, for a given vector of preference parameters, compute an optimal compensation schedule. Finally, we compare computed compensations with...
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We examine agricultural contracting parties' incentives to employ quality measurement. Quality measurement will be used if on-farm production of ``quality'' is sufficiently cheap, and quality measurement sufficiently informative. We qualitatively test these predictions with empirical observation across fresh and processed commodities, and across re...
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Recent amendments to the Montreal Protocol specify a 100% reduction in methyl bromide consumption in all developed countries by the year 2005 (except for "critical uses"). In this paper we consider one possible chemical substitute to methyl bromide, methyl iodide, that until recently has received little attention as a potential alternative. We exam...
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Recent amendments to the Montreal Protocol specify a 100% reduction in methyl bromide consumption in all developed countries by the year 2005 (except for “critical uses”). In this paper we consider one possible chemical substitute to methyl bromide, methyl iodide, that until recently has received little attention as a potential alternative. We exam...
Article
Many wildlife populations cause damage in agricultural systems but are also valued resources, either for their recreational value or for their existence and contribution to biological diversity. As a result, the nature of a given species—whether it is considered a “pest” or a “resource”—is often determined by the economic and regulatory environment...
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This article examines motivations underlying the government's choice of alternative policy mechanisms for subsidizing agriculture. Optimal policies are analyzed for three government objectives: one where the government wishes to ensure a minimum level of net income for all farmers, a second where the government's only concern is to transfer income...
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This article examines the structure of contractual relations between growers and first handlers in California fruit and vegetable markets. Evidence on existing structures is collected from on-site interviews and from a small mail survey of market intermediaries who contract with independent growers. Four generic instruments are identified—input con...
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We hypothesize that imperfect quality measurement in contracts for fresh fruits and vegetables results in a moral-hazard problem, and that the final price of the produce provides additional information regarding quality. As a consequence, growers are not shielded from all price risk. This hypothesis is tested informally with observations on actual...
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This paper examines the motivations underlying the government's choice of particular policy mechanisms for subsidizing agriculture. The analysis suggests that policies involving overproduction by relatively high-cost producers might arise from the perceived connection between the existence of relatively inefficient farm operations, and the preserva...
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We test a simple financial-contracting theory of the cooperative firm using data on historical variation in cooperative activity across 12 agricultural commodity sec-tors during the period 1946-2002. We treat cooperation as a particular implementation of "monitored credit" (or "informed intermediation") in the spirit of Holmström and Tirole (1997)....
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We use cross sectional data on the characteristics of landown- ers and tenant farmers in the United States to study the effect of multi- lateral contracting on land-lease contract choice. We find t hat tenants who rent from a relatively large number of landowners are more likely to use cash-rent, rather than crop-share, rental leases. Wh en a tenan...
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This report focuses on pork quality in a free range pork production system. The positive relationship found between pH and eating quality in earlier research is supported by this study. An increase in the pH level was positively associated with a more desirable value for each of the eating quality variables: flavor, juiciness, tenderness, and textu...
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The pork production industry is moving toward payment methods that are based on pork quality. To do so creates the need for collecting pork quality measurements. It is typically not cost effective to take pork quality measurements on all pork carcasses to determine quality payments for a pork producer. To determine a cost effective prediction of a...
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Full-text available
We develop a nancial-contracting theory of the cooperative rm where pro-duction requires three generic tasks: working, managing, and monitoring. Workers provide an intermediate input (or labor directly); managers convert the workers' input into a nal output; and directors monitor managers. We model the cooperative rm by letting the workers act also...
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Full-text available
APPENDIX August, 2002 This study was funded by the California Department of Food and Agriculture. The opinions expressed are those of the authors.

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