Given the volatility of agricultural marketing, contracts are mutually beneficial. It provides an element of stabilization between smallholders on the one hand and buyers and businesses on the other. What is lacking is mutual trust and adequate education (most often among farmers) to promote the rules. This task is better managed, among other things, by farmers` representatives (ZFU, AGRITEX, local authorities). This is further emphasized in the « Recommendations » section. The good days of a breeder or shipper selling the farmer`s crop on a handshake are long gone. In order to properly protect your breeder and himself as a shipper, it is imperative and proven to write a written agreement (contract) so that each party knows what is expected of each other. The agreement must be linear, transparent without hidden agendas and, above all, signed by both parties before the start of the navigation season. Despite these encouraging sentiments, the evaluation of such agreements has been made difficult by the fact that it takes place behind the scenes. For some goods such as tobacco, it is not allowed.
In addition, companies that export agricultural products favour direct contracts with farmers so that they can control production and maintain their reputation. While further studies are needed, suspicions seem to delay the development of outsourcing as a marketing tool. The fact that this happens behind the scenes shows that the potential is there. Those who produce on behalf of producers and collect the product and account from producers for the funds received have fiduciary duties to their producers. This means that they must represent the interests of their producers faithfully, faithfully and fairly and must not overstep the powers vested in them when marketing their producer`s crops. Marketing agents are licensed by the PACA branch of the U.S. Department of Agriculture (USDA) and the Department of Food and Agriculture (CDFA), Market Enforcement Branch. Under the requirements of the CDFA Market Enforcement Branch, product distributors are subject to a large number of laws and regulations, including pre-season disclosure, which clearly indicates that the producer can assert its rights to certain aspects of marketing the season`s crop.
Failure to comply with these rules is subject to the loss of the licence and significant financial liability of the agent. California`s Food and Agriculture Code provides exceptions to the extent that it applies to producer/shipper marketing agreements entered into under the enforcement industry in Section 56280.5. As a result, it is essential that shippers` and producer representatives regularly re-examine their written agreements with their producers to ensure that agreements address all issues that should be addressed. The Agricultural Marketing Agreement Act of 1937 provides jurisdiction for federal marketing contracts and also confirmed the marketing agreements of the Agricultural Adjustment Act of 1933. Elanor Starmer, administrator of the Agricultural Marketing Service, part of the U.S. Department of Agriculture (USDA), agrees and believes that these agreements « allow producers and handlers to work together to improve the competitive profile of their own industry and, in turn, to make all companies that sell a particular product succeed. » This means that a contracted farmer (sometimes a mandated intermediary) enters into a verbal/written agreement with (other) surrounding farmers on the cultivation (and delivery) of the prescribed quantity and quality of the products for the subsequent performance of his own contract (premium). PACA and the California Produce Dealer`s Act require written agreements with producers before the start of the shipping season.