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Contract Farming

Nowadays it is observed, in Greece too, a shift to Contract Farming by agricultural producers through investment programs. This is an agreement between producers and buyers. 
 
Each producer signs a contract with an entrepreneur who is interested for primary sector products. A contract not only for the amount of the product but also for the price the entrepreneur is about buy.
 
This way each producer will ensure that the production won’t be stocked. Meanwhile with the participation of banks, he has the opportunity to get a loan which will help him cover his production expenses. In other words, it gives him the amount of money that he needs (e.g. to buy seeds or fertilizer).
 
On the other hand, the buyer (e.g. food processing industries) concludes to an agreement with each producer that each product will be purchased at a specific price and quantity, even in times of low demand.
 

Contract Farming is not something new in our country and is taking place in products such as sugar beet, or even barley and wheat, products that end up in manufacturing process industries of sugar, beer and pasta.
 
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Advantages and Disadvantages

 
The advantages for the producer are that he has ensured the availability of his product and its price, but also his deadline and method for payment, while the buyer is given the capability of planning his production even during times of reduced production. In addition, collaborating with local producers can reduce travel and storage costs.
 
These way consumers can feel secure cause of the product testing during the production process.
 
Despite the advantages of contract farming mentioned above, one should stand on the disadvantages that also must be stated for Greek producers and entrepreneurs.
 
One of the disadvantages for the producer, and perhaps the most important, is that he depends entirely on the contract to produce and supply the product. He has no longer the ability to negotiate the product’s price on the markets.
 
As for the entrepreneur, we could note as a drawback the inability to respond to the contract terms in case of changes in the financial environment he performs. Consider also changes caused by financial conditions from illegitimate contest.
 

Conclusions

 
Contract farming is a big deal for producers and buyers of our country because it changes the way we are producing and promoting products. Agrohunter could not stand unconcerned in this progress and offers now its members, but not only to them, the opportunity to take part in Contract Farming   through Agriculture land service.

 

 
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