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Tufts OpenCourseware
Authors: Kathleen Merrigan, Ph.D., William Lockeretz, Ph.D.


  • Hamilton, Neil D., A, Farmer’s Legal Guide to Production Contracts, Farm Journal, Chaps 1-4 and 10, Jan. 1995.
  • Agricultural Outlook, Concentration in Meatpacking: Causes & Concerns, June-July 2000.
  • GIPSA, “Competition in the Marketplace,” webpage description of USDA role under Packers and Stockyards Act,, retrieved 3/3/03.
  • Welsh, Rick, Chap. 2, Anti-Corporatism in U.S. Agriculture, in Reorganizing U.S. Agriculture, Wallace Institute Report #7, August 1997

Key Questions

Production Contracts

  • What are the elements that define a production contract in agriculture?
  • How is a production contract different from a marketing contract?
  • Which are the agricultural sectors in which production contracts are commonly used?
  • What advantage does a composition- based grain marketing contract system offer the farmers, when compared to other forms of production contracts?
  • How does vertical integration encourage contract production?
  • How is contract production advantageous for agricultural companies?
  • What are the advantages and risks that a producer should consider when deciding on whether to accept a production contract or not?
  • What is the significance of the Statute of Frauds to a farmer who might be accepting a production contract?
  • What is the most common reason for breaching production contracts?
  • What are the author’s suggestions to any producer who might be considering a production contract?
  • What was the basis for evolving the Uniform Commercial Code ( UCC)?
  • A company sells seeds to a farmer with claims that they will produce high yields. The seeds are defective and the farmer loses the crop. Based on such experiences in the US, is the farmer entitled to any form of compensation? If so, what is s/he entitled to? What is the basis for deciding this?
  • What is a major factor to be considered when deciding an anticipatory breach of contracts?
  • A farmer you know is in dispute with a company over the terms of a production contract. The company sends a check as partial payment of the money owed him. What would you advise the farmer?
  • Is the farmer a merchant? What factors have the courts in the US considered while deciding on this issue?
  • Does it matter whether or not a farmer is considered as a merchant? What do the experiences documented show us?
  • What are some of the options available to buyers and sellers if a contract is breached?
  • How can a producer reduce the levels of risks posed by conditions that are not under his or her control ( e.g., drought), when entering any contract that requires the delivery of a certain quantity of produce to the buyer?
  • What is the importance of the concepts of “Unconscionability” and ‘Good Faith” when deciding on breaches of production contracts?
  • How do contracts for animal production differ from those for crop production?
  • In which sectors of animal production in the US is contracting most common?
  • What are some of the features that were common to the various lawsuits filed by the poultry producers against the contracting industry?
  • How is the compensation system in animal contracting worked out? How does this affect the producers?
  • What is the importance of the duration of contracts for producers?
  • Which laws offer some degree of protection to producers involved in animal production contracts? What are some of the main provisions of these legislations?

Consolidation in Meatpacking

  • In which sectors of animal production in the US is consolidation in meatpacking a very visible trend?
  • Considering both total and slaughter costs of meat packing operations, do larger plants essentially result in economies of scale?
  • What are the major reasons that contributed to increasing industry concentration over the last two decades?
  • Do consumers benefit because of industry concentration? If benefits exist, should industry consolidation be encouraged?