Description
The question is : in agriculture, differently from other areas in the economics, in the market, many governments (Brazil, bill 6,459/2013) Spain (Contrato tipo Agroalimentarios (), and many organizations (FAO/ UN) are promoting specific types of contracts in agriculture (Check India). Consider the Europen Comission Paper Green Deal, topic 22.1.6 From Farm to Fork, which aims to incentivize the food system to use only sustainable practices in EU, what will be replicated to the world, making the requirements for contracts more complex to the producers, specially outside Europe.
A) To what extent in agriculture types and pre-established models of contracts, which problems they intend to solve, what is its function? Why not in other areas? Why do we need type of contracts in this area instead os spot market? ; and
B) Something much more difficult: to what extent these problems are solved, reflects in the use of these type of contracts?
• Explain the Theory of contracts under a Law and Economics perspective
• In FAO website there are models and many examples/samples of contract farming (Contract Farming Resource Centre | Food and Agriculture Organization of the United Nations ()
Possible results:
– asymmetry of information
– on the distribution or allocation of the risks, since probably the farmer is assuming much more risks due to weather changes than the buyer of the cattle or the buyer of the farm, probably. Timing.
– maybe that is the holdup problem behind. Also, all these products have investments that are required to fulfil the requirements for the buyer that afterwards is the only potential buyer.
Spain: late payments to the farmers. Many big producers play with the money that they are gaining by selling the fruits of whatsoever and then they are abusing the commercial credit – financial problem, normal proceedings?
