Question

Compare share cropping contract with a fixed contract. What are benefits and inefficiencies of each?

Answer 1

• In a share cropping contract, the share cropper and farmer both enters into a mutual agreement stating that the necessities needed for the farming such as irrigation, fertilizers and seeds will be provided by the farmer and sharecropper works as the labor.

In fixed contract, the employee and the employer both enters into a mutual agreement that is valid for a specific period of time. Through fixed contracts, it is possible to increase the labor by measure the work of labors for a fixed time period before making them permanent.

Benefits of share cropping contract :

• Through share cropping, the landlords doesn't have to pay the administrative costs on the fields.
• The landlords doesn't have to pay the total price for the plantation cost.

Disadvantages of share cropping contract are :

• Crop lien is main problem associated with share cropping contract.
• Landowners doesn't get initial up front costs. They only get money after the harvesting of the crops in their plantation.

Benefits of fixed contract are :

• The capability to pay and budgetting is most advantage of fixed contract.
• The buyer has the capability to budget for the contract costs.

disadvantages of fixed contract are :

• The two of the parties have to completely stick to the contract for that time period.
• The customer don't have any of the option to make modifications to the product during the time period.

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