What Is A Cultivation Agreement

(2) If both parties are satisfied with the outcome of the agreement, it may be extended by an additional season, but there is no obligation for either party to renew the contract. Contract farming must be commercially profitable. To maximize profitability, companies must choose the best farmers available. Once suitable farmers have been identified, it is necessary to build trust, because contracts only work if both parties think they are better off by associating with them. To do this, it is necessary to cooperate and exchange information. For example, differences of opinion on product classification can be avoided by specifying clear and simple specifications in a contract and ensuring that farmers or their representatives are present when classifying products. Delays in payment can immediately create trust problems and should be avoided. Contracts should be flexible to take into account the possibility of extreme events such as high open market prices or bad weather. Finally, as hard as the parties are trying, differences of opinion are inevitable. Ideally, contracts should provide for conciliation by someone who is acceptable to both the company and farmers. FAO`s guiding principle for responsible contractual attitude [12] provides specific advice on how to maximize the chances of success for both businesses and farmers. In this regard, the role of producer organizations in the negotiation is particularly important to the interests of small farmers. [13] Wages include agricultural production on the basis of an agreement between the buyer and producers.

Sometimes it is a matter of leaving the buyer with the required quality and price, with the farmer agreeing to deliver at a later date. However, contracts more often describe the conditions of production and delivery of agricultural products to the buyer`s premises. [1] The farmer undertakes to supply the agreed quantities to a farm or livestock based on the buyer`s quality standards and delivery requirements. In return, the buyer, usually a business, agrees to buy the product, often at a price set in advance. The company also often declares itself ready to support the farmer. B for example by providing inputs, helping with soil preparation, producing advice and transporting products to its farms. The term “outgrower scheme” is sometimes used in a way that is synonymous with contract farming, most often in eastern and southern Africa. Wage moderation can be used for many agricultural products, although it is rarer in developing countries for basic necessities such as rice and maize. Subsequently, PepsiCo and other companies used similar methods for growing food grains (basmatis rice), spices (chillies) and oilseeds (soil nuts), with the exception of vegetable plants such as potatoes.

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