Designing contracts for the bioenergy industry: The role of swift relational contracting

The bioenergy industry is a core component of the EU approach to reduce its dependency on non-renewable resources while attempting to support biomass producers and farmers in rural areas. However, bioenergy activities also pose governance challenges associated with intensified inter-organizational collaborations and network relations between farmers, bio-industries and other supply chain actors. Often, existing contractual arrangements, such as contract farming schemes, become inadequate and potentially unfair. Given this background, our study addresses how to design more effective contractual arrangements that facilitate bioenergy activities by incorporating farmers' perspectives. Our findings indicate that contracts that in the course of being formal and enforceable, are enriched in relational and procedural clauses are ranked as superior by the weaker party in the relation, i.e. farmers. The identified preferred configuration that we called swift relational contracting contributes to contract theory and ecological economics by providing insights into how relational, flexible and frequently adaptable contractual structures can fit with the requirements of emerging bio-based industries.