An Analysis of Contracts in the Idaho Processing-Potato Industry

This paper presents an analysis of a sample of contracts used by the Idaho processing-potato industry in recent years. A particular focus is on the price- and quality-related provisions of these contracts. Potato growers are paid an incentive­ adjusted price. This price is calculated using a complex system of incentives and penalties for potato size and quality characteristics. These size and quality factors are those that most directly affect product recovery (:finished product as a percentage of raw-product usage) and the processed-product quality. Although most of the provisions of the analyzed contracts are similar, there are some differences in the level and scope of incentives and penalties. The paper concludes by suggesting directions for future research in this area that would help shed light on the effectiveness of contractual relations in the analyzed industry.