Final Presentation for course Fundamentals of Contract Farming

1. Fundamentals of Contract
Farming
Final Assignment Submission – Procurement
Management for Food and Retail industries
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

2. …the following contracts
• The Formula
• The Format
• The Specifications
Legal
Framework
of a
contract
Format
Formula
Specific-
ations
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037
The framework on which we will analyze…
• Global Green Company
Limited
• Marico Industries Limited
• Export Papaya Agreement

3. Global Green Company Limited – Formula and
Format
• Market specified – In this contract, no market local or international has been
specified
• Resource specified – Seeds and inputs of good varieties will be provided by the
company
• Management and Income specified – The crop growth season will be managed by
the farmer under active supervision of the company
• Land ownership and land tenure specified – crop to be grown on self irrigated land
• Nature of the contract – The contract is a letter of agreement in the vernacular
language so that it is convenient for both the signatories to understand the terms.
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

4. Global Green Company Limited –
Specifications
• Contract duration – In this contract, the duration has not been specified
• Quality standards – The quality standards have been stated quite elaborately and the
defects have been stated very elaborately. Also, right from the beginning the
company has specified the seeds, pesticides and inputs to be used. Emphasis has
been put highly on grading as it is a strong determinant of the end price
• Production quotas – No production quota has been specified
• Cultivation practices – Practices like sowing, harvesting and grading have been
specified by the company in detail.
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

5. Global Green Company Limited –
Specifications (Contd.)
• Crop delivery arrangements – Company vehicles to procure the crop after each
harvest and transfer it smoothly. In case of any delay from the farmer’s side, there is
a penalty attached. However, in exceptional cases like transport strikes, the farmer
will be reimbursed for transporting the crop
• Pricing arrangements – Prices have been determined basis the grade of crop
supplied and are subject to fluctuations in the international market
• Payment procedures – 80% of the payment to be delivered after 30 days of supply
and the final settlement shall be paid 15 days after the completion of the crop
• Insurance arrangements – Nothing has been specified
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

6. Marico Industries Limited – Formula and
Format
• Market specified – While the product has been specified, the market is restricted to
the farmer as the seller and Marico as the buyer
• Resource specified – Safflower seeds
• Management and Income specified – Management of the farm lies in the hand of
the farmer while a company representative will review and ascertain the actual
production
• Land ownership and land tenure specified – Land owned by the farmer is where the
contracted crop is to be cultivated
• Nature of the contract – This is a formal agreement between both the parties but
merely in form of a correspondence
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

7. Marico Industries Limited – Specifications
• Contract duration – Since the duration has not been specified, we can assume that
it could be for one harvest season
• Quality standards – have been specified by as dry (less than 6% moisture) and
cleaned (less than 1% refraction)
• Production quotas – is set as the entirety of the harvest as specified in quintals (+/-
20%)
• Cultivation practices – has not been defined which implies that the farmer is free to
adopt the method of this choice
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

8. Marico Industries Limited – Specifications
(Contd.)
• Crop delivery arrangements – Delivery to be made on the specified date by the
farmer at a specified buying center
• Pricing arrangements – Rate of purchase has been set at Rs. 1200 per quintal. It has
also been defined that expenses for commission, weighing and market fee will not
be borne by the farmer
• Payment procedures – Payment to be received within 24 hours of delivery
• Insurance arrangements – No provision for insurance has been specified
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

9. Export Papaya Agreement – Formula and
Format
• Market specified – Crop to be sold only to the company for the export market
• Resource specified – All inputs like seedlings, fertilizers to be provided by the
company
• Management and Income specified – All production activities must be in accordance
with the company’s recommendation
• Land ownership and land tenure specified – No light in thrown on land ownership
and tenure in this contract
• Nature of the contract – This is a simple registration
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

10. Export Papaya Agreement – Specifications
• Contract duration – Validity of agreement has been set to a date to be filled in the
placeholder
• Quality standards – The proposes export quality as per National Marketing
Authority specifications. Grading to be done as per the standards set
• Production quotas – has been defined rigorously. At the same time, it has been
mentioned that purchase will be within the quota specified in hectares
• Cultivation practices – Production activities must be in accordance with the
company’s recommendations
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037

11. Export Papaya Agreement – Specifications
(Contd.)
• Crop delivery arrangements – To be bought by the company at the designated
buying point
• Pricing arrangements – Price of purchase set at a specific amount (to be filled in)
subject to standard specifications being adhered to
• Payment procedures – Payments to be released on a fortnightly basis with 25 percent
of gross sales proceeds being deducted from advances (seeds and inputs) until the
total sum is recovered
• Insurance arrangements – Nothing regarding insurance has been specified in this
agreement
Submitted to Prof. Niraj Kumar by Sampad Acharya | UR15037