The importance of contractual agreements, a strategy to organize the marketing and production activities of a farm, has increased the last decades. The objective of this article is to introduce a series of essays that discuss issues related to contractual arrangements such as: market power, legislation, and why farmers adopt contracts.

The share of agricultural production covered by contracts grew for more than 4 decades until 2011. The share of production covered in 2013 was 35%, down from its 2011 peak of 40%. There is no broad trend in the use of agricultural contracts in the 2000s; rather, there are substantial episodic shifts in specific commodity classes.

The Packers and Stockyard Act of 1921 is the primary legislation for regulating competition and trade practices in the livestock, meat, and poultry industries. Recent attempts to decouple competition issues from issues related to fraud or “unfair” practices in the legislation might make economic sense in contracting environments that involve multiple market imperfections.

Contracts provide potential benefits for organizing agricultural production, as well as some pitfalls. Risk management is one of the more commonly cited benefits. However, empirical evidence from tomato growers suggests that risk-shifting may not be the only or dominant reason that agricultural producers choose to use contracts.

Contract farming is the cornerstone of any agricultural value chain. There is mounting empirical evidence on what farmers in developing countries get out of participating in contract farming, generally indicating positive welfare effects. Research challenges remain, however, and the existing evidence does not provide clear policy implications.