How does the chips companies maintain a stable price for potatoes that they use to manufacture the chips.

Find alternatives for potatoes.

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Buy more potatoes when the price in low.

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They enter into contract farming with the potato farmers.

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Cultivate potatoes by themselves

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Solution

The correct option is C They enter into contract farming with the potato farmers.
The companies that manufacture chips signs a contract with the potato farmers so that they will get potatoes at predetermined price. This arrangement where the farmer enters into a contract with the company is called Contract farming.

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