American Agricultural Economics Association Conference Paper: "Understanding Production Contracts: Testing an Agency Theory Model" UC Davis co-author: Rachel E. Goodhue, assistant professor Date and time: Tuesday, Aug. 4, 3:30 to 5 p.m. Farmers should know their place in the pecking order before they take on contracts to raise broiler chickens for a processor, says Goodhue. She recently tested theories related to the use of production contracts in the broiler industry -- a growing trend across U.S. agricultural sectors and one in which California is a leader. Under a broiler production contract, a processor provides a flock and feed to a farmer, who is compensated according to the weight of the broilers and the cost efficiency of his or her care. Goodhue found that processors place larger flocks -- and do so more consistently -- with growers that better meet their standards. Because contracts provide incentives for performance relative to other farmers contracting with the same processor, she says, knowing the competition is important. "You have to know how you'll stack up. Are you going to be able to perform and deliver under the specifications of the contract?"