This case examines the contracting decisions facing a safflower seed processing company in southern Idaho. Mountain States Oilseeds (MSO) specializes in the procurement, storage, cleaning, drying, packaging, and transportation of safflower seeds. Recent supply chain disruptions coupled with regional drought have greatly decreased safflower seed availability. MSO must adjust their procurement strategy to secure sufficient safflower seed to meet their own commitments to their buyers. This case study illustrates the various hurdles to be overcome in drafting a successful producer-processor agricultural contract (farmer participation, moral hazard, etc.). It also highlights the trade-offs associated with various contractual payment mechanisms common within agricultural contracts (performance payments, acreage payments, and quality adjustments).

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