Common Contracts

Contract farming: Some fundamentals to be considered in contract design

Contract Farming Agreement • August 11th, 2009

• Contract Type
  Contract Farming Agreement
• Filed
  August 11th, 2009

Contract farming agreements are forward contracts specifying the obli- gations of two business partners: the sellers’ (farmers’) promise to supply and the buyers’ (processors’/ traders’) prom- ise to off-take agricultural produce as agreed. With regard to substance, form and the process of concluding such arrangements, farming contracts are quite variable: they may be established in verbal or written form; they may be concluded by individual farmers or by farmer groups; the description of obli- gations may remain quite vague or be reasonably specific; the arrangements may be based on renewable seasonal negotiations or on long-term business