Common use of Pricing Mechanism Clause in Contracts

Pricing Mechanism. 12.1 The produce must be purchased at a price provided for in the farming agreement. The price may be linked to market price and in such case, a minimum guaranteed price must be specified. Similarly, the method of determining payment above the minimum guaranteed price and a clear price reference must be provided in the agreement. This price referencing may be done at in a number of ways, including the following options: Option 1: Variable price with variable component over and above the guaranteed price, based on a reference price (say, modal price reported at the nearest APMC with e-NAM facility at the time of delivery) Option 2: Fixed price according to different quality grades of the produce Grades Fixed Price (Rs/qtl) Option 3: Fixed price or variable price at the time of delivery of produce to the Sponsor, whichever is greater but cannot be below the guaranteed price.

Pricing Mechanism. 12.1 The produce must be purchased at a price provided for in the farming agreement. The price may be linked to market price and in such case, a minimum guaranteed price must be specified. Similarly, the method of determining payment above the minimum guaranteed price and based on a clear price reference must be provided in the agreement. This price referencing may be done at in a number of ways, including the following options: Option 1: Variable price with variable component over and above the guaranteed price, based on a reference price (say, modal price reported at the nearest APMC with e-NAM facility at the time of delivery) Option 2: Fixed price according to different quality grades of the produce Grades Fixed Price (Rs/qtl) Option 3: Fixed price or variable price at the time of delivery of produce to the Sponsor, whichever is greater but cannot be below the guaranteed price. Option 4: Agreement may provide for payment of bonus both in the case of fixed price or variable price mechanisms.