The Rural Voice, 1998-06, Page 41• Smith's advice to anyone thinking
of entering a contracting situation is
to get all the details in writing and
make sure you understand each of the
tcrms and conditions you arc signing.
Typically a swine contract is
between a swine ownership group
and one of three types of producers.
The ownership group may include
large producers in a loop, fccd
companies, farrowers and growers.
The loop or company may
contract to purchase early
weaned pigs from a farrowing
operation. It may contract with
growers for growing and finishing
pigs while it markets the finished
pigs. The owners of the pigs accept
the majority of the risk and reap the
majority of the rewards.
Speaking at Shakespeare Smith
said the biggest reluctance in entering
contracts has often been from
farrowing operators who will be
required, under the terms of the deal,
to use specific genetics to provide
weaners for the loop. "If you have to
clean out and restock you're going to
want good bucks on the table," he
said.
Smith recommends that a contract
include a clear spelling out of who
owns the pigs, the feed and the
supplies. Who owns the barn and
equipment? Who is providing the
insurance on each of these
components?
The contract will need to provide
the legal requirement for owners to
have access to see the pigs they own
on property they don't. Owners may
also want some security to make sure
the barn is kept locked so pigs don't
disappear out the side door, Smith
says.
Terms of payment should be
clearly spelled out in the contract. Is
the payment so much per head?
When will payments be made? In
some cases there may need to be a
requirement on the ownership to pay
a monthly fee even if there are no
pigs in the barn. If you have
mortgage payments, you can't afford
to have no money coming in because
the ownership had problems
somewhere else in the loop, Smith
said.
Performance incentives can be
problematic. Much of the
performance of the animals is
determined by the genetics of the
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