Data Sets

Procurement and Contracting by Organic Handlers: Contract Data 2004


Overview Procurement Data Contract Data • 2007 • 2004 List of Data Tables About This Product Documentation Download Data

This data table is from the organic handlers contracts data, which provides information about the use of written and verbal contracts and common contract provisions. Contracts data include information on 9 commodity groups and 39 commodities from 686 facilities that use contracts.

For more information, see the Documentation.
For 2007 data, see Contracts Data 2007.


Commodity:
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All Commodities Combined in National Totals 2004

Basic characteristics of handlers
Range of number of handlers over 40

Function 1/ 2/	Manufacturers/processors	53%
	All other functions	35%

	All handlers	Manufacturer/ processor	All other functions
Type of contract	Percent of handlers 3/
Written	73%	73%	70%
Verbal	27%	27%	30%
Compensation term used most often
Flat Price	40%	40%	36%
Conventional price plus a mark up	9%	8%	6%
Production costs plus a mark up	4%	3%	5%
Negotiated price at time of transaction	32%	34%	35%
Price based on performance relative to other suppliers	2%	2%	2%
Price determination not in contract	4%	4%	3%
Other method	10%	9%	14%
Price mechanisms in standard contract
Quantity discount	26%	26%	31%
Quality premium	27%	28%	32%
Penalties for lower than contracted quality	29%	28%	31%
Prices depend on supplier's past performance	11%	11%	10%
Method of quality measurement for pricing purposes
Observing samples	56%	57%	57%
Testing samples	62%	66%	54%
Third-party certification	26%	28%	23%
USDA grading standards	25%	23%	29%
Downstream price	8%	5%	15%
Price does not depend on quality measures	6%	5%	6%
When suppliers are paid
Upon delivery of product, organic certificate	61%	65%	55%
At harvest	5%	4%	4%
After downstream sale	10%	7%	17%
Other	24%	24%	25%
Contract length
Seasonal	33%	31%	38%
Yearly	40%	40%	35%
Multi-year	9%	10%	10%
Other	7%	6%	8%
Time not specified	12%	13%	10%
Standard contract clauses
Automatic renewal	13%	13%	13%
Verification of organic certification	84%	87%	77%
Minimum quality standards	78%	82%	78%
Number of acres you will buy production of	25%	25%	25%
Best management practices	23%	25%	21%
Reject deliveries that don't meet specs	67%	69%	62%
Other actions if contract specs not met	42%	42%	44%
Place of delivery	67%	69%	63%
Date of delivery	58%	60%	60%
Exclusive supply	14%	11%	20%

N/A = Not available, not applicable, or not reportable for reasons of confidentiality (fewer than three respondents).
1/ Firms often reported more than one function; responses from a single firm may be reported in both the “Manufacturer/processor” and “All other functions” columns. Thus, summing across functions often exceeds 100 percent.
2/ Non-responses to all questions are not reported
3/ See the Documentation for how the percentages are calculated.

For more information, contact: Carolyn Dimitri

Web administration: webadmin@ers.usda.gov

Updated date: November 26 , 2007