Coca-Cola Expands Corn Contract Farming Model

Oct 16, 2012

Coca-Cola Co., one of the global leaders in the beverage industry announced today that the company plans to expand its contract farming portfolio to include other agriculture commodities such as coffee, tea and dairy products – the company already practices contract farming with corn. Contract farming is when the farmer agrees in a contract to provide an agreed upon quantity of an agriculture product to the supplier.

"In most Coca-Cola products, there's a clear directional shift toward the use of high-fructose corn syrup, which is cheaper than sugar," Michael Ferrari, Director of Global Agricultural Commodity Risk Management at Coca-Cola.

The company plans on replicating their corn contracting farming practices and applying that modal to other agriculture commodities as well. Ferrari said in a company statement that contract farming has been a successful model for the company because it allows the company to monitor product yield and quality.

The company also reported that its net income rose 3% in the third quarter and attributes those sales with selling more sports drinks and tea beverages as well as growth in emerging markets. In this period, Coca-Cola saw their sales volume up by 15% and had a 34% increase for its brand in India. Company shares rose 22 cents now pegged at $38.35 U.S.

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