ABSTRACT
Contract farming has always generated controversy over its social and economic implications. In the United States, concerns have been raised because of asymmetrical market information between agribusiness and individual farmers, among other factors influencing the bargaining power between them (Roy 1972). These concerns have dogged contract farming in the United States since the late nineteenth century when problems of monopsony and oligopsony by food processors and marketers prompted Congress to enact a series of laws aimed at increasing the bargaining power of farmers and providing legal frameworks through which contract farming disputes could be resolved. Such laws include: the Capper Volstead Act of 1922, which exempted agricultural cooperatives from anti-trust laws in order to increase the power of cooperative bargaining associations; the Sugar Act of 1934 which established farmer bargaining associations for sugar beet growers; the Agricultural Marketing Act of 1937; the Agricultural Fair Practices Act of 1967; the Uniform Business Code; and the Perishable Agricultural Commodities Act. All of these provided legal frameworks for resolving disputes over contracts, bargaining over prices, and enabling farmers cooperatively to process agricultural products (Key and Runsten 1999). As recently as 2001, sixteen State Attorneys General in the United States drafted for state legislation a Producer Protection Act designed to protect farmers from perceived exploitation by agribusiness firms. Senator Tom Harkin of Iowa introduced similar legislation in the United States Senate in 2001, despite claims by opponents who argued that such legislation would reduce the competitiveness of the grain and livestock industries which rely largely on contract farming, and that it was impossible to write long-term contracts that meet all contingencies (Boehlje et al. 2001).
