Other supermarkets and processors enter into production contracts, which sometimes include the supply of inputs, credit, and extension services (for example, in Madagascar and Slovakia. For many small farmers, these contracts are the only means to acquire inputs and use support services. By supplying inputs and providing assured markets and prices, contracting firms share
production and marketing risks with farmers. Reducing these risks helps stabilize farmers’ incomes, critical in the absence of insurance markets. The technical assistance to farmers also generates indirect benefits, as farmers apply the improved farm practices for the contract crops to other crops, increasing their productivity.