A contract for future sale is a
sales contract under which a
farmer 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, 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 (angiosperms) that is formed from the ovary after flowering.
Fruits are the means by which angiosperms disseminate their seeds. Edible fruits in particular have long propaga ...
s, and 43% of
milk
Milk is a white liquid food produced by the mammary glands of lactating mammals. It is the primary source of nutrition for young mammals (including breastfeeding, breastfed human infants) before they are able to digestion, digest solid food. ...
. 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
{{farm-stub