At El Nativo Growers, we believe in making contract growing arrangements easy, clear, fair, and simple. We do whatever we can to create terms and conditions that work well for BOTH parties. Our contract terms and conditions almost always fit on a few pages and are clear and straightforward. We have provided explanations of some of the terms and conditions below. And please remember that the terms and conditions are written on a project by project basis.
Payment terms are most often the same as those established between the two companies prior to the agreement. If a company does not have Net Terms, a credit application can be issued and usually processed within the contract negotiation period. If the application for credit is not approved, payment for the contracted material will be required at the time of delivery.
All contract growing arrangements require a deposit to begin the growing process. The amount of the deposit is dependent on the material that is being grown. If the material is being grown in odd container sizes that have little resale value, the deposit will be higher than if traditional containers are used. The deposit will also be higher if the material has low resale value, regardless of the container size. Generally, the deposit amounts range from 15% to 50% of the total contract value. The average deposit is 25%. In almost all cases, deposits are non-refundable. If a project is cancelled or significantly changed, the nursery uses the deposit money to cover the associated costs and loss. If the contract is completed as written, the deposit is always taken off the last invoice(s) for the project, not the first. Unfortunately we have had a number of circumstances that have forced this stipulation.
All contract growing arrangements also have maintenance fee allowances. Although we understand that projects are often delayed for a variety of reasons, we are unable to absorb the financial loss from material that is lost or damaged due to the delays. Our standard maintenance rate is 4% of the total contract amount per month. This fee usually starts on the first day of the second month after delivery was supposed to occur (we usually grant a 30 day grace period). There are contracts, however, where the maintenance fees start promptly, often due to the extreme growth rate of specific species, particularly riparian species (Salix, Populus, Platanus, etc.)
As part of the maintenance section, most contracts have payment stipulations in the event that material does not ship after a certain period of time regardless of maintenance charges. In these cases, the client is responsible for payment whether or not the material has shipped and whether or not it will ship in the future.
Finally, maintenance periods are not indefinite. Each is given a final end date after which El Nativo Growers will not hold plant material and the contractor will not only forfeit the deposit but will likely be responsible for all or a portion of the material being held for the project. In this case, an invoice will be generated and submitted to the client on the final end date of the contract growing agreement.