A contract for future sale is a
sales contract under which a
farmer
A farmer is a person engaged in agriculture, raising living organisms for food or raw materials. The term usually applies to people who do some combination of raising field crops, orchards, vineyards, poultry, or other livestock. A farmer m ...
agrees to deliver products of specified quality and quantity to a buyer for a specified price within a prescribed time frame. Contract sales are a growing practice, recently accounting for 86% of
poultry
Poultry () are domesticated birds kept by humans for their eggs, their meat or their feathers. These birds are most typically members of the superorder Galloanserae (fowl), especially the order Galliformes (which includes chickens, qu ...
, over 80% of
tobacco
Tobacco is the common name of several plants in the genus '' Nicotiana'' of the family Solanaceae, and the general term for any product prepared from the cured leaves of these plants. More than 70 species of tobacco are known, but the ...
, more than 50% of
fruit
In botany, a fruit is the seed-bearing structure in flowering plants that is formed from the ovary after flowering.
Fruits are the means by which flowering plants (also known as angiosperms) disseminate their seeds. Edible fruits in partic ...
s, and 43% of
milk
Milk is a white liquid food produced by the mammary glands of mammals. It is the primary source of nutrition for young mammals (including breastfed human infants) before they are able to digest solid food. Immune factors and immune-modulat ...
. The benefits to processors are greater uniformity and predictability resulting in lower costs of grading, processing, and packing. The benefits to farmers are more stable income from a guaranteed market and price, and possibly access to a wider range of production inputs and advanced technology. Critics are concerned about lack of accessible price information, and manipulation of markets to the disadvantage of producers.
References
*
United States Department of Agriculture
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