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Prompt A production contract is a legal agreement between a farmer (grower) and another company to produce a specific type, quantity, and quality of an agricultural commodity
Prompt
A production contract is a legal agreement between a farmer (grower) and another company to produce a specific type, quantity, and quality of an agricultural commodity.
The company owns the commodity (animals, crop), provides animals, feed, medicine, and other inputs.
The grower raises the animal/crop and provides land, facilities, and labor.
Some typical poultry production contract provisions are listed below. Discuss why it may or may not be a good idea from the farmer’s perspective to agree to that provision. Just try a few each, and try ones that others have not done.
- Prohibition against keeping other fowl on property in a poultry production contract.
- May not use supplies not provided by company.
- Company’s right to access to grower’s facility.
- Company’s right to take over or remove birds.
- No modifications unless in writing.
- Assignment of contract only with company approval (so a different person can take over for the grower).
- Grower bears risk of catastrophe.
- Timing, frequency, and number of flocks determined by company.
Confidentiality provisions: Grower may not discuss the contract terms with anyone else.
Guidelines
Note that this discussion is worth "0" points, so any response goes into your overall participation points and can be used to catch up if you are behind, or to get ahead on points.
Expert Solution
May not use supplies not provided by company.
This provision would force the farmer to use only the supplies provided by the company, which could be lacking. A company trying to cut corners would provide cheap feed or subpar inputs. If the farmer wanted to use a certain kind of feed or medication, they would be unable to.
Timing, frequency, and number of flocks determined by company.
If the farmer owns the facility, they would want the largest amount of flocks in and out to maximize profit. If the company determines this, they will make the decision that benefits them, not the farmer. This could leave the farmer without a means of income, if they aren’t allowed to get flocks from a different company.
Confidentiality provisions: Grower may not discuss the contract terms with anyone else.
This stops the farmer from checking with other farmers to make sure they are getting fair terms. Without the knowledge of fair terms, the farmers might try and compete with other farmers to make sure they get picked for the contract. This will lower the farmer’s potential income by undercutting each other.
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