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Assessing aspects of agricultural contracts: An application to German agriculture

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  • Klaus Drescher

    (Department of Agricultural Economics, Christian-Albrechts-University Kiel, Olshausenstr. 40-60, 24118 Kiel, Germany)

Abstract

We define contract farming as an agreement between legally independent firms for the production of a commodity for a future market. Analyzing contract farming and the intensity (quality) of contracts is as important as the extent of the contractual arrangements. Current publications do not sufficiently distinguish between contracts, which have a far-reaching and long-term influence on farm-firms and those based on spot-market transactions. A model has been developed to distinguish between different forms and features of agricultural contracts. Agricultural contracts are analyzed on the extent of authority, the duration of the contract, and the extent of investment with regard to the contract. The model provides insights into both the extent and the intensity of contract farming. Results of an empirical analysis of agricultural contracts in Germany clearly show that the majority of the contracts can be characterized as short-term agreements with few binding penalties. Hence, contracts between farmers and up- or downstream industries rarely influence the organizational structure and business development of German farms [JEL codes: Q130]. © 2000 John Wiley & Sons, Inc.

Suggested Citation

  • Klaus Drescher, 2000. "Assessing aspects of agricultural contracts: An application to German agriculture," Agribusiness, John Wiley & Sons, Ltd., vol. 16(4), pages 385-398.
    • Handle: RePEc:wly:agribz:v:16:y:2000:i:4:p:385-398
    DOI: 10.1002/1520-6297(200023)16:4<385::AID-AGR1>3.0.CO;2-P
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    Cited by:

    1. Iffat Abbas Abbasi & Hasbullah Ashari & Amin Jan & Ahmad Shabudin Ariffin, 2021. "Contract Farming towards Social Business: A New Paradigm," Sustainability, MDPI, vol. 13(22), pages 1-17, November.
    2. Parwez, Sazzad, 2015. "A Conceptual Model for Integration of Indian Food Supply chains," MPRA Paper 73310, University Library of Munich, Germany, revised 09 Aug 2015.
    3. Mugwagwa, Innocent & Bijman, Jos & Trienekens, Jacques, 2020. "Typology of contract farming arrangements: a transaction cost perspective," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 59(2), March.
    4. repec:ags:ijag24:344551 is not listed on IDEAS
    5. Parwez, Sazzad, 2015. "A Conceptual Model for Integration of Indian Food Supply chains," MPRA Paper 73263, University Library of Munich, Germany, revised 09 Aug 2015.
    6. Sazzad Parwez, 2016. "A Conceptual Model for Integration of Indian Food Supply Chains," Global Business Review, International Management Institute, vol. 17(4), pages 834-850, August.
    7. Gabor G. Szabo & Krisztina Bardos, 2005. "Vertical Coordination by Contracts in Agribusiness - An Empirical Research in the Hungarian Dairy Sector," CERS-IE WORKING PAPERS 0515, Institute of Economics, Centre for Economic and Regional Studies.
    8. Claude Ménard, 2017. "Finding our way in the jungle: insights from organization theory," Post-Print hal-04001137, HAL.
    9. Frasa, Stefanie & Carlberg, Jared & Hogan, Robert, 2015. "Use of Contracts by Prairie Agricultural Producers," Working Papers 232328, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    10. Malak-Rawlikowska, Agata, 2018. "Are Farmers Trapped in Hold-Up Relationships? The Case of Dairy Farmers and Feed Suppliers," Village and Agriculture (Wieś i Rolnictwo), Polish Academy of Sciences (IRWiR PAN), Institute of Rural and Agricultural Development, vol. 181(4), December.
    11. Parwez, Sazzad, 2013. "Food Supply Chain Management in Indian Agriculture: Issues, Opportunities and Further Research," MPRA Paper 60441, University Library of Munich, Germany, revised 03 Jul 2014.
    12. Claude Ménard, 2017. "Finding our way in the jungle: insights from organization theory," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-04001137, HAL.

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