Evaluation of Bai-Salam Contracts From The Perspective of Dairies And Milk Producers: An Investigation in Kars City
DOI:
https://doi.org/10.63556/tisej.2025.1481Keywords:
Bai Salam Contract, Agricultural Credit, Agricultural Economics, Islamic Finance, Islamic EconomicsAbstract
This study examines salam (advance payment) contracts between dairies and milk producers operating in the Kars province with a systematic approach in the context of challenges, risks, and feasibility issues. In the study, semi-structured interviews were conducted with 10 dairy farm owners and 25 milk producers using a random sampling method. In order to increase the internal validity of the research, the “researcher triangulation” method was used, and the data obtained were analyzed separately on the basis of dairy farms and milk producers. Then, similarities and differences were systematically revealed through comparative analysis.
Research findings show that 80% of dairy farms and 84% of milk producers actively use salam contracts. Salam contracts stand out as a common financing instrument, especially in rural areas, and the financing provided is largely allocated to operational activities such as animal feeding, veterinary services, and health expenses. However, structural problems have been identified, such as the lack of a standardized mechanism for determining milk prices on a regional and national scale, the presence of legal sanctions in case of non-fulfillment of commitments, and the serious economic risks faced by the parties, especially during periods of high inflation. The study emphasizes the importance of salam contracts in terms of rural development and agricultural finance, but also draws attention to existing problems regarding the sustainability and effectiveness of this practice.
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