Farmers who contract their land could simplify contract-farming agreements as part of a new service, changing the way they and contractors work together.
New Contract Option Agreements offered by consultant Brown & Co allow contractors to purchase the crops and be responsible for harvesting, post-harvest operations and crop marketing.
The risks and hassle of harvesting and administration are taken away from the farmer.
Contractors are also encouraged to farm efficiently by having the first option to purchase crops before harvest.
“Traditional contract farm agreements are complicated, and in a lot of cases divisible surplus is under pressure,” agricultural business consultant Philip Dunn said.
“What we are trying to do is simplify matters. The farmer is still the trader and the contractor will provide contract services, but he will also provide inputs for the crops and receive first option to buy the crops from the farmer.”
Some of the risk of crop values and costs are passed from the farmer to the contractor, but the contractor could benefit if the worth of the crop rises.
“The contract option agreement transfers more risk but also more reward to the contractor, while making life simpler for the farmer,” Mr Dunn said.
|Lower administrative costs||Efforts and costs concentrated on farm growing|
|Potentially lower contract charges||Receives benefits of efficient inpjut purchasing, harvesting and crop marketing|
|Farmer retains single paymen t and environmental monies||Less concentration on when and how to harvest, store and market crops|
|Opportunity to rent out crop stores to contractor||Less confrontation on when and how to harvest, store and market crops|