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Corn+Soybean Digest

Seed For Thought

Read The Fine Print Farmers are notorious for being trusting and honorable folks. Well, if you're going to enter the contract growing arena this year, like many growers, change your attitude.

Contracts can be tricky, and for the most part they're probably not written with your best interests in mind. However, the possibility of locking in a premium by preserving identity is alluring and worth considering.

Although not for everyone, contract growing definitely can be more profitable than conventional production. Of course, there's more work involved with specialty crops, and quality requirements are higher. Still, there can be a sizeable payoff.

Nancy Erickson and her husband farm 2,900 acres near Altona, IL, and have been contracting specialty crops, like tofu soybeans and high-oil corn, for over five years. Her advice: "Be sure you read the contract and then take it to someone else to read, too, like an attorney."

She likes the contracts they signed four to five years ago a whole lot more than the ones they're signing now. "Today, those contracts are riskier," she says.

Erickson cautions you to make sure there aren't unrealistic expectations written into the contracts, like delivery dates that are impossible to meet or fine print that excludes the premium on a portion of your bushels.

Also, don't forget to make sure your landlord buys into the practice, especially when it comes to marketing. "Some landlords just don't like to have to deal with all the stipulations of contracts," she says.

Kim Larson, who farms 1,500 acres near Willmar, MN, and has been raising crops on a variety of contracts, says, "the devil is in the details." His advice mirrors Erickson's - make sure you read and understand the contracts.

With a history of trying to capture the added value of specialty crops, Larson is convinced that contracts are going to be the future. "Get used to it," he says.

So if you're contemplating planting some sort of contract crops this year, beware and be smart. You might begin by reading John Russnogle's story on page 33 titled: "15 Questions About Grain Contracts." In the story there's a checklist to help you decide whether you're a good candidate for a production contract. And if you are, read the fine print.

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