One-Third of All Commodities Grown Under Contract

(WASHINGTON, DC) Contracts are a way of life for many in the agricultural industry. Farmers use contracts to manage price and production risks while processors and buyers use contracts to ensure farm products with specific qualities while reducing supply uncertainty. In 2017, just over one-third of all commodities sold in the U.S. were produced under contract. For commodities like peanuts, tobacco, sugar beets, hogs, and poultry/eggs, half of those crops were contracted. In contrast, less than 20 percent of wheat, soybeans, and corn are currently grown under contract. The share of hogs produced under contract nearly doubled over the past 20 years to 63 percent in 2017.