Contract farming also shifts most of the risks of production
on to the farmers. In animal raising, farmers borrow to invest
in modern infrastructure on a long term basis (5 to 10
year loans). But the contract with the company rarely exceeds
one year. If the company does not renew the agreement,
the farmer is left with the debt. The risks of natural
disasters and crop failures are also borne by producers.
For example, during the bird flu crisis in Thailand in 2004,
some farmers under contract with CP did not receive any
chicks for more than 6 months, without receiving any compensation
or even any explanation for this long delay. Minimising
risks is also one of the advantages for the industry
that the FAO sees in contract farming: “Production is more
reliable than open-market purchases and the sponsoring
company faces less risk by not being responsible for production”