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Why do some agribusiness firms engage in production contracts? Provide at least one justification and how...

Why do some agribusiness firms engage in production contracts? Provide at least one justification and how a production contract corrects production issues.

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Answer #1

Agribusiness firms engage in production contracts to ensure no one player dominates the market and industry prices remain in sustainable range.

Production contracts ensures quality standards and quantity specifications, compensation for farmers, thus ensuring the production issues to be mitigated as there is no excess inventory or defects in goods.

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