He could even lose the farm itself where contract commitments cannot be honoured. By comparison, for many of the contract situations, the contractor can limit losses in a bad situation by simply closing the door. Those of us who witnessed the events of the 1980's in agriculture remember all too well the consequences of poor markets, unfavourable exchange rates and high interest costs. In the final analysis, the requirement for continued success is that both the contractor and the farm producer sustain profits and that distribution of those profits is commensurate with the risks taken and labour spent. Where fair play is not evident the contract participants will eventually lose their interest and ability to perform.
Litigation then becomes a very real possibility.
I think some contractors and farm producers have identified the solution. Their contracts provide for payments based on a pricing formula and price parity determinations that account for both favourable and unfavourable market changes. Where the contract commitments are not satisfied by the contractor the advance is forfeited in whole or part in favour of the contract feeder. Conversion of 3 to 1 2. Feed per pig 243 kg.