Ultra Long Term Agreement

The purchase date is used to determine if there is an active agreement for the current purchase. In this case, this value is used to compare the criteria with the prices of the product supplier, so that the contractual terms (special price, special delivery time) are calculated automatically when purchasing. According to a recent UN report, developing countries have half a billion small farms and most producers live in poverty (United Nations Development Programme, 2016). These small producer families are responsible for most of the malnutrition and stunting on the planet. Properly used long-term contracts directly address this problem or, at the very least, steer the system in a more sustainable direction. The average producer in developing countries faces the following problems: of course, cooperation or satellite farms are not the only way for buyers and producers to partner to introduce a LTC. It is possible that existing third-party aggregators to coordinate the current short-term or plant-based purchasing process between producers and buyers may also be able to switch to a LTC with a commercial buyer. Although the additional costs associated with these businesses, including a “medium-sized man” between the buyer and the producer, are borne, some of the benefits of LTCs are likely to be paid to the producer. One commodity that would serve as an example is coffee, where some buyers have set up LTCs with roasters, which also act as aggregators. The expectations that the roaster will meet several initiatives with its manufacturers, such as technical training and access to certification, are included in the roaster contract. 8.

innovation through joint planning and long-term cooperation. One of the essential benefits of LTCs is the knowledge that the buyer and producer can acquire through joint planning. While this is not possible for all crops — some crops such as corn and soybeans would be more difficult — the potential for other crops and livestock farming is a fascinating possibility. Instead of being faceless, the producer-aggregator and buyers now have a more direct link and common goals, since each party becomes a known part of the value chain. Both parties are encouraged to cooperate in the mutual interest. Since the manufacturer may have multi-year investments or financing based on the duration of the contract indicated, a buyback schedule for the purchaser of these debts should be considered. Another option could be the inclusion of a contractual language allowing the buyer to transfer or sell the contract to another buyer who would be forced to comply with the agreement with the manufacturer after the termination of the contract. Access to plant insurance is another potential benefit for the producer, which in the long run will also benefit the buyer by reducing the risk of security of supply and protecting its production base. In North America and Europe, almost all producers have the protection of plant insurance, either through public bodies or through private companies.