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TeachMeFinance.com - explain Contract Contract The term 'Contract ' as it applies to the area of agriculture can be defined as ' Written or oral agreement spelling out the parties’ understanding of how a commodity is to be produced and/or marketed, including specifications for quantity, quality, and price. Marketing contracts are commonly used for crops, while production contracts are more prevalent in the livestock industry. Contracts contrast to cash markets. Cash markets continue to dominate the agriculture sector, accounting for almost 70% of farm commodity sales in 1997. However, contracting could likely continue to grow as a risk management tool for farmers and a coordination tool for processors. Futures contracts provide a way to manage price risk that typically do not involve actual delivery of commodities'. Previous 5 Terms: Contour lines Contour map Contour mining Contour plowing Contour strip farming Next 5 Terms: Contract acreage Contract commodity Contract for future sale Contract payments under AMTA Contract price About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005-2011 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional medical, legal or financial advice. Information presented at TeachMeFinance.com is provided on an "AS-IS" basis. Please read the disclaimer for details.