Question

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

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

Answer 1

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.