Co-operative Marketing Agreements Marketing agreements are contracts between the co-operative and its members which can benefit both the individual producer-members and the business. Producers benefit from knowing they have a "home" for a portion or all of their production-a particularly valuable asset when selling perishable commodities in markets where there are few buyers. For the co-operative, they provide management the means to coordinate the volume of business with the size of available facilities, allowing the co-operative to achieve the lowest possible operating costs. Marketing agreements may also enable management to pre-sell members' produce on the basis of timing considerations included in these contracts.

Marketing agreements should be prepared with the help of an attorney and should include the following:

• A description of the commodities to be produced, packed, processed, and/or marketed by the co-operative, specifying the quantity to be delivered to the co-operative. Depending on the particular circumstances, the quantity to be delivered can be stated in terms of weight or the production of a specific acreage. If the contract is on an acreage basis, the co-operative assumes the yield risk. If the contract is based on a delivered weight basis, the producer bears the risk of being unable to deliver the specified yield.
• A statement concerning the disposition of production grown in excess of the contracted commitment. Some co-operatives require that all crop produced in excess of the marketing agreement be destroyed to prevent it from flooding the market and depressing prices. Other
  co-operatives require member-growers to deliver all the commodity they produce, while still others allow members to market excess production at their own discretion.
• The time and place where legal title of ownership is transferred from the grower to the co-operative.
• A description of how and when the producer will be paid and the method of determining the value of the commodity.
• A provision obligating the grower-member to notify the co-operative if a lien (such as a claim securing a bank loan) has been placed against the crop covered by the marketing agreement.
• A statement of the rights and obligations of the co-operative and the member in the event that the member fails or refuses to deliver the commodity specified. This section specifically defines those actions that breach the contract and the remedies to be applied.
• The life span of the agreement and the time period during which the contract may be extended or during which either party may withdraw.
• An "Act-of-God" clause which holds each party harmless in the event of natural disasters or events beyond human control.

Source: Starting an Agricultural Marketing Cooperative. Center for Cooperatives, University of California, Davis