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Grain and livestock contracting
 By Beth Forbes
 As producers look for ways to increase their farm incomes or at least stabilize them contracting is a growing trend in both grain and livestock production.
Specialty cropsnon-traditional crops usually grown to the specifications of particular clientsrequire some unique considerations. Purdue agricultural economist James Pritchett says it's worthwhile to consider specialty crops, but not without studying how they affect the marketing and production practices of the "traditional" farm.
Pritchett says maintaining the desired traits of specialty crops may require certain planting, harvesting, handling, storage and processing practices. Contracts between purchasers and producers ensure markets for the products and that the grains will be suitable for end-users.
For livestock producers, the motive may be the availability of financing, says agricultural economist Ken Foster. "Many producers strapped for cash find themselves with empty facilities and time on their hands," he says. "A contractor may provide the hogs, veterinary service and feed if the farmer will supply the labor and buildings."
Pritchett and Foster recommend producers contact attorneys, technical and financial experts, as well as other producers to help them understand contract details. Some points to consider:
- Does the contract require additional investment in equipment and is the contract duration long enough to recapture those costs?
- Do facilities and equipment need to be certified or approved?
- How is the producer paid? Are the payment terms clear?
- Under what conditions can the contract be terminated, renewed or renegotiated?
- Are provisions for conflict resolution spelled out in the contract?
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