One of the most common agricultural agreements is the crop production contract. Crop production contracts generally include the following elements: at least two parties (contractor and grower) make a legally binding agreement for a fixed period of time; the agreement is executed before production begins; the agreement calls for the grower to produce crops on land owned or controlled by the contractor; the grower will deliver these crops to the contractor after the grower cares for the crops in accordance with the contractor’s requirements; and the contractor will compensate the grower for the crops in accordance with payment terms that may include premiums or deductions for performance. Production agreements are not partnership agreements—typically the contractor, not the grower, has legal title to the crop and the agreement makes it clear the grower is an independent contractor rather than an employee or partner.
Like any other contract, the emphasis should be on precise wording and clear drafting. Using numbered paragraphs with bolded titles makes for an organized contract. Certain sections will almost always be included: introduction (usually identifies the parties), purpose, grower’s rights and duties, owner’s rights and duties, length of contract, payment terms, termination of contract, breach/remedies, no partnership, limited liability/insurance requirements, miscellaneous, and signature blocks. The parties usually focus on payment terms, so the parties’ attorneys should review the rest of the contract for other details. The allocation of risk and remedies clauses are important because, while no one wants to think about what can go wrong, well-written production agreements will dictate what happens if it does.