Contract Farming & Contract or Market?
Compares the contract
Compare the guaranteed contract price against your expected market revenue at a realistic average yield and price after quality cuts — see the better option, the per-acre difference and the price premium.
Compare your contract
Next: if the contract beats your realistic average market price after quality cuts, sign it for price security; read the rejection/quality clauses carefully.
Contracts shift price risk to the buyer but add quality-spec and side-selling risk; compare against your true average realisation, not the peak market price.
Contract farming — key facts
- Contract revenue
- yield × guaranteed price
- Market revenue
- yield × price after cuts
- Contract value
- certainty, often inputs + buyback
- Worth a premium?
- yes — for guaranteed price
- Shifts to buyer
- price risk
- Adds for grower
- quality-spec & side-selling risk
- Compare on
- realistic average yield & price
- Privacy
- Runs in your browser; nothing uploaded
Certainty has a price — know if it's worth paying
A contract locks a guaranteed price — often with inputs and a buyback thrown in — and that certainty is genuinely worth a small premium when the alternative is a price crash at harvest. But it only makes sense if you weigh it honestly: compare the contract revenue against the revenue you'd realistically earn on the open market at your average yield and price after quality cuts, not against the best price of a good year.
This tool shows the better option, the contract and market revenue, the per-acre difference, and the price premium. Remember the trade-off: a contract shifts price risk to the buyer but adds quality-specification risk and side-selling risk. Pair it with the Crop Profit, Break-Even Price and Store or Sell tools to decide how — and to whom — to sell the harvest.
Compare honestly
Contract revenue against realistic market revenue.
Value the certainty
See the premium you pay — or earn — for a fixed price.
Weigh the risks
Price risk shifts, but quality and side-selling risk rise.
Decide per acre
The difference that actually lands in your pocket.
Frequently Asked Questions
What does a contract farming margin calculator do?+
It compares the revenue from a guaranteed contract price against what you'd expect to earn on the open market at your realistic average yield and price after quality cuts. The tool shows which option pays more, the per-acre difference, and the premium the contract price represents over the market.
How do I compare contract revenue with market revenue?+
Contract revenue is the contracted yield times the guaranteed price. Market revenue is your realistic average yield times your expected market price after the quality cuts buyers apply. Comparing the two on a per-acre basis tells you whether the certainty of the contract is worth more than the market upside.
Why is the contract often worth a small premium?+
A contract locks a guaranteed price — and often supplies inputs and a buyback — which removes the risk of a price crash at harvest. That certainty has real value, so a contract that pays a little less than the average expected market price can still be the better choice once you account for risk.
What quality cuts should I expect?+
Buyers deduct for moisture, foreign matter, broken or undersized produce and grade. These cuts lower the effective price you actually receive on the market, so enter a realistic post-cut price rather than the headline mandi rate. The same applies to contract produce that fails to meet the spec.
What risks does a contract add?+
While a contract shifts price risk to the buyer, it adds quality-specification risk (rejection if you miss the grade) and side-selling risk (penalties or loss of relationship if you sell elsewhere when the market spikes). Weigh these against the price certainty the contract provides.
When is the open market the better choice?+
When you expect the market price after cuts, times your realistic yield, to comfortably beat the contract revenue — and you can bear the risk of being wrong. Farmers with storage, market access and an appetite for price risk often do better on the open market in a strong year.
Does the contract supply inputs?+
Many contracts bundle seed, agro-chemicals and advice, sometimes on credit recovered at buyback. That can lower your cash outlay and improve quality, but tie you to the buyer's package. Factor any input savings into the comparison if your contract includes them.
What is the price premium the tool shows?+
It's how much higher (or lower) the guaranteed contract price is than your expected market price, as a percentage. A positive premium means the contract pays above the market; a negative premium means you're paying for certainty by accepting a lower price than you'd expect on average.
Can I use this in any country or currency?+
Yes — choose from 8 currencies and enter your local prices, yields and quality cuts. The comparison of contract revenue versus expected market revenue applies to buyback and procurement contracts anywhere, whatever the crop or currency.
Is this financial advice?+
No — it's a planning estimate to compare two revenue scenarios. Real outcomes depend on the season's weather, prices and how well you meet the contract spec. Use the result to inform the decision, then read the contract terms carefully before signing.