Implications of Contract Farming
The type of grower-firm contract relationship discussed above has
important implications. These are briefly summarized below.
Farm Eficcieency and Adjustment While contracts might appear to offer some degree of farmer security,it is unlikely they will inhibit the general on-farm adjustment process.Indeed, adjustment forces may be stronger in contract situations; if greater grower efficiencies can be achieved it will usually be to the firm’s advantage to force these farm changes into effect through the contract mechanism