The majority of eggs are purchased and sold in relationship to the reported prices discussed earlier. In general, prices during the last decade have been relatively low and profits were practically nonexistent. This means the purchaser was frequently buying eggs below production costs. Even though costs to the buyer were minimized, monthly price changes, often as much as 15 cents per dozen, can raise havoc with budgets and cash flow. For this reason, the industry is interested in cost-plus pricing systems, which can provide more stable egg prices and cash flow for both the buyer and seller.
Traditional contractual arrangements generally state the relationship of prices relative to market quotations and the nature of added services. New arrangements are meant to stabilize prices and cash flow, to relate them to mutually agreed upon cost factors (published feed prices), and to allow both parties to have reasonable returns for their investments and efforts. Such arrangements can work if both parties will look at the contract's effectiveness over a 3 4 year period.
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