Purchasing Contracts and Price Policy as Means of Planning Agricultural Production

Since the end of the Second world war, the contract system has been gaining ground steadily in the agriculture of most of the economically developed countries. There are several reasons for this. (a)The development of food processing and transformation industries leads to concentration both in the demand for agricultural products and in their supply, for these industries are dependent upon regular supplies of farm produce of a given quality.(b)Production of agricultural inputs is an expanding industry. Anxious to widen their markets, firms in the industry often take a hand themselves in organizing both agricultural pro-duction and marketing and so initiate a process of vertical integration in agriculture. The contract system is one of the basic forms of such integration.(c)A revolution has taken place in food distribution. Chains of supermarkets and the multiple outlets of wholesale dealers are handling more and more of the food supplies to the public, and these chains need regular supplies of standardized products just as much as the food industries do.(d)In agriculture, as in industry, people are becoming more and more aware of the need to plan production.