Reading the Fine Print in Agricultural Contracts: Conventional Contract Clauses, Risks and Returns

Goodhue, Rachael E.; Hoffmann, Sandra

doi:10.1111/j.1467-8276.2006.00939.x

Cited by 8 publications

(7 citation statements)

References 6 publications

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“…A marketing contract is an agreement between a farmer and a buyer to sell a commodity at a specifi ed price before the commodity is ready to be marketed (Goodhue and Hoffmann, 2006). The risk shifting characteristics of the received contract depend mainly on its terms (e.g.…”

Section: Introductionmentioning

confidence: 99%

Adoption of risk management strategies in European agriculture

Asseldonk¹,

Tzouramani²,

Ge³

et al. 2016

Stud. Agr. Econ.

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Given the increased attention to risk management in the European Union's (EU) Common Agricultural Policy (CAP), it is important to monitor and evaluate the rates of adoption by farmers and their determinants over time. Current European agricultural statistics (Farm Accountancy Data Network) capture few indicators that assess such strategies, but complementing data collected during the EU Framework 7 project FLINT have allowed the adoption of risk management strategies and the determinants of farmers' preference for complementary or substitute instruments to be assessed. Adoption rates of risk management instruments such as insurance contracts, price contracts, off-farm income, other types risk of reduction measures and other gainful activities vary signifi cantly across EU Member States and farming types. Econometric analysis indicates that larger farms more often adopt crop insurance, occupational accident insurance, price contracts and diversifi cation but are less likely to adopt credit avoidance and off-farm employment (at a signifi cance level of 1 per cent). For policy analyses these indicators are a step forward for the determination of the net impacts and establishment of counterfactuals in the long term (i.e. time series encompassing also adverse years) for measuring the impact of the CAP at farm level.

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Section: Introductionmentioning

confidence: 99%

Adoption of risk management strategies in European agriculture

Asseldonk¹,

Tzouramani²,

Ge³

et al. 2016

Stud. Agr. Econ.

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show abstract

“…Farmers and their families can respond to risks in many ways, and can respond ex ante (before the event) in precautionary ways, or ex post (after the event) to try and minimize their losses. Strategies for coping with risk include finding off-farm employment (Mcnamara and Weiss 2005, Ito and Kurosaki 2009), saving or using credit markets, informal borrowing (e.g., loans between family members), adopting risk-reducing technologies such as seed varieties with properties such as drought or herbicide resistance that emerged during the green revolution (Feder et al 1985), engaging in contracts such as those that ensure that the farmer will have a buyer for his product at the end of the season at a set price (Goodhue and Hoffmann 2006), and diversification of production.…”

Section: Economic Factors That Support Diversificationmentioning

confidence: 99%

Economic Factors Affecting Diversified Farming Systems

Bowman¹,

Zilberman²

2013

E&S

209

129

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ABSTRACT. In response to a shift toward specialization and mechanization during the 20th century, there has been momentum on the part of a vocal contingent of consumers, producers, researchers, and policy makers who call for a transition toward a new model of agriculture. This model employs fewer synthetic inputs, incorporates practices which enhance biodiversity and environmental services at local, regional, and global scales, and takes into account the social implications of production practices, market dynamics, and product mixes. Within this vision, diversified farming systems (DFS) have emerged as a model that incorporates functional biodiversity at multiple temporal and spatial scales to maintain ecosystem services critical to agricultural production. Our aim is to provide an economists' perspective on the factors which make diversified farming systems (DFS) economically attractive, or not-so-attractive, to farmers, and to discuss the potential for and roadblocks to widespread adoption. We focus on how a range of existing and emerging factors drive profitability and adoption of DFS. We believe that, in order for DFS to thrive, a number of structural changes are needed. These include: 1) public and private investment in the development of low-cost, practical technologies that reduce the costs of production in DFS, 2) support for and coordination of evolving markets for ecosystem services and products from DFS and 3) the elimination of subsidies and crop insurance programs that perpetuate the unsustainable production of staple crops. We suggest that subsidies and funding be directed, instead, toward points 1) and 2), as well as toward incentives for consumption of nutritious food.

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“…Moreover, most contracts stipulate that the aggregator provides farmers with assistance, at both technical, organizational and management level, in establishing productive farming. This statement, is not in line with the confirmation relied upon and commented by [29]. They conclude that in contract farming there is an information gap in terms of demand and prices.…”

Section: Commitments/ Methods Of Payment Percentage In Terms Of the Tmentioning

confidence: 78%

Contract Farming in the Morocco Cereal Sector: Contract Clauses, Ambiguity, and Opportunism

Bouichou¹,

Fadlaoui²,

Allali³

et al. 2019

IJAE

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Our main aim was to analyze of the various types of contractual clauses framework of Agricultural Aggregation Projects (AAP) in the cereal sector in Morocco. We used the data from the content of the contracts and by individual interviews with key actors complicated in the process of implementation of the aggregation projects of cereals. The results reveal that only eight Agricultural Aggregation Project, out of 119, received the certificate of aggregation. This is reflecting the fact that, the implementation of this model of vertical coordination was underway. In addition, the analysis of the contract-farming data for clauses has shown us 5 important clauses categories: production (quantity and quality) and payment methods; agricultural extension systems; inputs supply; management of risks; and dispute resolution mechanisms. These findings highlight the value added to the contractual clauses and the need to strengthen the visibility and role of the contract farming as a framework to accompany the investments of ''The Green Morocco Plan'', in particular with regard to agricultural aggregation projects. We also show that the contract participation reduces the transaction costs in aggregation system, reduction in the number of intermediaries and ensure the link between the producers and markets. The study concludes that, despite enactment of laws on farm aggregation, contract smallholders remain vulnerable to opportunist behavior. It suggests that the contract clauses must be accompanied by commensurate controls and Involving farmers in negotiating contract terms to ensure 'win-win' outcomes for Aggregator (AG) and Aggregated (Ag).

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Reading the Fine Print in Agricultural Contracts: Conventional Contract Clauses, Risks and Returns

Cited by 8 publications

References 6 publications

Adoption of risk management strategies in European agriculture

Adoption of risk management strategies in European agriculture

Economic Factors Affecting Diversified Farming Systems

Contract Farming in the Morocco Cereal Sector: Contract Clauses, Ambiguity, and Opportunism

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