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Question

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

A
Find alternatives for potatoes.
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B
Buy more potatoes when the price in low.
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C
They enter into contract farming with the potato farmers.
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D
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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